Principles of Macroeconomics

Running head: PRINCIPLES OF MACROECONOMICS
Principles of Macroeconomics
Name of the Student
Name of the University
Author Note

PRINCIPLES OF MACROECONOMICS1
Table of Contents
Response to Question 1..............................................................................................................2
Response to Question 2..............................................................................................................2
Response to Question 3..............................................................................................................3
Response to Question 4..............................................................................................................4
Response to Question 5..............................................................................................................5
References..................................................................................................................................7

PRINCIPLES OF MACROECONOMICS2
Response to Question 1
The innate skills of an individual, and those improved upon or acquired with years of
experience and knowledge earned, in combination with his or her personality and social
attributes, is referred to as human capital (Johnson, Schnatterly & Hill, 2013). The quantity of
workers who are available for work implies only the strength of the work force, and not their
skills, experiences or how their intrinsic attributes can add value to the production process.
Human capital is a comprehensive concept which cannot be numerically expressed due to its
qualitative nature while the number of the workers is a quantitative value.
Human capital can be increased in the following ways:
- Investment of nation’s productive resources in enhancing its education level by
setting targets for greater enrolment rates and higher teacher-student ratios.
- Encouragement of on-the-job and vocational learning so that students get to know the
real world beyond their books.
- Moving ahead with times and adapting to latest technology and cost-effective
measures.
If an increase in labor force leads to a reduction in the level of capital per worker, then the
worker productivity will decrease. This may also lead to disguised unemployment for those
who would not have enough capital to work with. In this case, human capital would not
increase. If an increase in the workforce is accompanied by greater availability of capital,
keeping the capital to labor ratio constant, it may leave the human capital unchanged.
However, if the newer workforce is trained on better technology and have sufficient capital to
work with, it would add to the level of human capital.