Q. Write two components of human capital formation... Plz fast I will give brain mark plz plz
Answers
Human capital is formed when someone invests in humans.
Education and skill are major determinants of the human formation.
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Gross Capital Formation Components
1) Gross fixed capital formation includes the gross change in the fixed assets of the economy. Fixed assets are produced assets that are destined for production for more than a year. We speak of the gross variation because we must discount the consumption of fixed capital to obtain the net formation of fixed capital. Therefore, it has two components:
More from Business Study Notes:- What is Economy
A) The consumption of fixed capital is the loss of the value of the fixed assets that are possessed, as a result of normal wear and obsolescence. This means that in an economy, part of the production goes to investment in order to produce more goods and services, but over time these goods and services are losing their value, they deteriorate. With the use they wear out, the very passage of time subjects these assets to deterioration (to put a single example, by the inclemency of the meteorology), are emerging new alternatives to perform the same function, etc. The consumption of fixed capital intends to measure that wear and tear that the realized investment undergoes.
B) The net formation of fixed capital is the result of discounting this consumption of fixed capital to the gross formation of fixed capital. Gross fixed capital formation tells us the value of the resources that have been demanded for investment in fixed assets; The net formation of fixed capital informs us of the changes that are occurring in the value of the fixed capital of the economy once considered the wear and tear that the existing fixed assets are suffering.
Within gross fixed capital formation, investments in capital goods (such as transport equipment and machinery) and investments in intellectual property products (such as R & D results; Mining and oil prospecting, software and databases or the originals of recreational, literary and artistic works). Construction is also very prominent. By convention, although it has some characteristics of consumption, investment in housing construction is included in gross fixed capital formation. Also included are the construction activities of other buildings and those of other constructions that are not of building.
2) Stock change is measured as the difference between the value of the inflows and outflows of inventories over the period and after discounting the current losses of the goods held in stock. They form part of the stock:
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