1. Human capital formation as a concept is better explained in terms of a process, which enables __
1) individuals of a country to accumulate more capital.
2) increasing the knowledge, skill levels and capacities of the people of the country.
3) accumulation of tangible wealth.
4) accumulation of intangible wealth.
Which of the statements given above is/are correct?

A. 1 and 2
B. 2 only
C. 2 and 4
D. 1, 3 and 4

2. Consider the following statements are true:
1. Commodity taxation can also be used to boost the rate of savings
2. High sales tax on luxury goods reduces consumption
3. Savings will naturally increase if income remains constant

A. Only one statement is true
B. All statements are true
C. No statement is true
D. Only two statements are true

3. Which of the following statements are true?
1. Gross Capital Formation (GCF) refers to Net investment after depreciation
2. Net Capital Formation (NCF) refers to Total investment before depreciation

A. 1 only
B. 2 only
C. Both 1&2
D. Neither 1nor2

4. Consider the following statements are true:
1. Saving is the practice of reserving a portion of one’s current income for future use
2. Net Savings are generated when disposable personal income exceeds personal expenditure
3. Gross Savings include net savings as well as depreciation allowances for future replacement of real assets

A. Only one statement is true
B. All statements are true
C. No statement is true
D. Only two statements are true

5. In an open economy, the national income (Y) of the economy is: (C, I, G, X, M stand for Consumption, Investment, Govt. Expenditure, total exports and total imports respectively.)

A. Y = C + I + G + X
B. Y = I + G –X + M
C. Y = C + I + G + (X – M)
D. Y = C – G + I + (X – M)

6. Which of the following statements are true?
1. Public Investment Model – Government-funded investment in goods and services.
2. Private Investment Model – government participation in private sector ventures through domestic or foreign investment

A. 1 only
B. 2 only
C. Both 1&2
D. Neither 1nor2

7. How do reduced interest rates affect investment spending in the economy?

A. Investment spending decreases as interest rates fall.
B. Investment spending remains unchanged.
C. Investment spending increases due to easier access to capital.
D. There is no relationship between interest rates and investment spending.

8. What term is used to describe the process of banks taking deposits and lending those funds to borrowers?

A. Financial management
B. Financial intermediation
C. Asset allocation
D. Risk assessment

9. Why can allocating natural resources lead to conflict?

A. They are always abundant
B. They are easily replaceable
C. Growing shortages and scarcities can lead to economic and political conflict
D. They have no economic value

10. Which of the following statements are true?
1. Incremental capital-output ratio (ICOR) describes the relationship between the amount of investment made in the economy and the resulting increase in GDP.
2. Lower Incremental capital-output ratio (ICOR) is preferred because it indicate that a country’s production is more efficient

A. 1 only
B. 2 only
C. Both 1&2
D. Neither 1nor2