CAIE A-Level Economics 1.3.2 Human and Physical Capital

CAIE A-Level Economics 1.3.2 Human and Physical Capital
Cambridge International AS & A Level Economics 9708 syllabus for exams in 2026, 2027 and 20282026–2028

Practise distinguishing knowledge and skills embodied in workers from machinery and infrastructure, then tracing how education, training or import policy changes each stock.

How this is tested

  • classify education, training and experience as investment in human capital
  • classify machinery, tools and infrastructure as physical capital used in further production
  • predict how a policy changes each capital stock separately rather than assuming both move together

Question 4

[Maximum number: 1]

A country increases its spending on education and training. It pays for this by reducing unemployment benefit payments and increasing taxes on imports of machinery.

What is the likely effect of these changes?

human capital

physical capital

decreases

decreases

decreases

increases

increases

decreases

increases

increases