Question : Which factor affects the quality of human capital in an economy?
Option 1: Income inequality
Option 2: Natural disasters
Option 3: Government regulations
Option 4: Global economic trends
Correct Answer: Income inequality
Solution : The correct answer is (a) Income inequality.
Income inequality refers to the unequal distribution of income among individuals or households within a society. It can have significant implications for the quality of human capital, which represents the knowledge, skills, education, health, and other attributes of individuals that contribute to their productivity and potential economic contribution.
High levels of income inequality can have adverse effects on the quality of human capital in several ways. Firstly, it can limit access to quality education and healthcare for individuals from lower-income backgrounds, leading to disparities in skills and health outcomes. Limited access to educational opportunities and healthcare can hinder the development of human capital and reduce productivity in the economy.
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