Class 12 Economics – Human Capital Formation (MCQ Mock Test)

Boost Your Economics Preparation – Test Your Knowledge on Human Capital Formation!

Do you understand how education, health, and skill development contribute to a nation’s growth? Evaluate your understanding with this MCQ-based mock test on Human Capital Formation in India, designed as per the latest Class 12 Economics syllabus (2025–26). This test covers all key concepts — meaning and importance of human capital, sources of human capital formation, the role of education and health, problems in human capital development, and government initiatives for improvement.

Each question is framed to test conceptual clarity, application skills, and analytical thinking. Perfect for board exam preparation and quick revision, this mock test helps you assess your readiness and identify areas that need more focus.

Attempt now and strengthen your command over one of the most vital chapters in Indian Economic Development – Human Capital Formation!

1. Percentage of education cess levied on all union taxes is:

2. Which of the following statement is true?

Major share of education expenditure goes to higher education.

No education cess is imposed by the government on all union taxes.

Human development is based on the idea that education and health are integral to human well-being.

Education and literacy can be used as synonyms of each other.

3. ‘Right to Education Act’ was enacted in the year:

2006

2007

2008

2009

4. Identify the correct pair from the following Column I and Column II and choose the correct alternative:

Column I

Column II

A. NCERT

B. IGNOU

C. UGC

D. A dult Literacy Rate

(i) Implementing policies in the field of school education

(ii) Takes measures for promotion and coordination of university education

(iii) Responsible for introduction and promotion of open university

(iv) P ercentage of population aged 20 years and over who can both read and write

Alternatives:

A – (i)

B – (ii)

C – (iii)

D – (iv)

5. Statement 1: On-the-job trainings help to bridge a gap between theoretical concepts and practical experiences.

Statement 2: On-the-job trainings update the employees, with the latest changes in their work field.

Statement 1 is true and statement 2 is false

Statement 1 is false and statement 2 is true

Both statements 1 and 2 are true

Both statements 1 and 2 are false

6. Identify the organisation, which is functioning as an apex organisation to provide quality school education.

University Grants Commission

Indian Council for Medical Research

All India Council of Technical Education

National Council of Educational Research and Training

7. Assertion (A): Spending money on acquiring information is the source of human capital.

Reason (R): It help the individual to invest in better areas from future point of view.

Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)

Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)

Assertion (A) is true but Reason (R) is false

Assertion (A) is false but Reason (R) is true

8. __________ capital treats human beings as a means to an end.

Physical Capital

Financial Capital

Human Capital

None of these

9. Which of the following could aid in human capital formation?

Expanding the labour market by increasing supply of jobs

Creating larger industries with more complex equipment

Creating open markets with increased stability

Promoting gender equality in the family

10. “India faces ‘educated unemployment’, even though the number of educated individuals ready for jobs has increased.”

Which of the following is most likely the reason for this?

The supply of labour is much higher than demand.

Investments in health have not taken place proportionally.

Although more students are enrolled in schools, there is a high dropout rate.

Reverse migration has not been accompanied by alternative employment opportunities.

11. In India, education sector is regulated by:

Ministry of education

NCERT

UGC and AICTE

All of the above

12. Education Commission (1964-66) had recommended that at least ___________ per cent of GDP should be spent on education.

13. In the __________ year, the Indian Government made free and compulsory education for age group of 16 to 14 years.

2001

2009

2003

2007

14. Statement 1: Human capital treats human beings as a means to an end.

Statement 2: As per Human Capital Perspective, any investment in education and health is unproductive if it does not enhance output of goods and services.

Statement 1 is true and statement 2 is false

Statement 1 is false and statement 2 is true

Both statements 1 and 2 are true

Both statements 1 and 2 are false

15. Which of the following is not a source of Human Capital Formation?

Education

Saving

Health

Information

16. If a worker absents herself/himself for long due to ill health, it will affect his/her:

job security

wage/income

productivity

All of the above

17. Which of the following is the correct difference between physical and human capital?

Physical capital can be sold but human capital cannot be sold.

Physical capital cannot be separated from its owner while human capital can.

Physical capital provides both private and social benefits while human capital provides only social benefits.

The depreciation of physical capital can be arrested with more investment while human capital will continue to deplete.

18. Which capital treats human beings as a means to an end?

Physical Capital

Financial Capital

Human Capital

None of the above

19. Before introducing new technology, a firm provides the basic skills to the workers regarding its usage. This is which source of human capital formation?

Study programme for adults

On the job training

Expenditure on Information

Investment in education

20. Match the following set of statements given in Column I and Column II and choose the correct alternative:

Column I

Column II

A. Preventive medicine

B. Medical research body

C. Curative medicine

D. Social medicine

(i) Medical intervention during illness

(ii) Vaccination

(iii) Spread of health literacy

(iv) ICMR

Alternatives:

A – (ii), B – (iv), C – (iii), D – (i)

A – (ii), B – (iv), C – (i), D – (iii)

A – (iv), B – (iii), C – (i), D – (ii)

A – (i), B – (iv), C – (ii), D – (iii)

21. The stock of skill and expertise of nation at a point of time is called:

Human capital

Human development

Human capital formation

Physical capital

22. Assertion (A): Physical capital is not easily mobile between countries.

Reason (R): Physical capital is heavy in weight.

Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)

Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)

Assertion (A) is true but Reason (R) is false

Assertion (A) is false but Reason (R) is true

23. The Adult Literacy Rate among females in India in the year 2000 was:

68.4 per cent

61.9 per cent

45.4 per cent

37.9 per cent

24. UNDP stands for:

United Nation Developing Plan

United Nations Development Programme

United Nation Duration Programme

United Nation Development Policy

25. Statement 1: Physical capital is tangible and can be easily sold in the market like any other commodity while Human capital is intangible and it can not be sold in the market.

Statement 2: Physical capital formation can be built even through imports whereas human capital formation is to be done through conscious policy formulations.

Statement 1 is true and statement 2 is false

Statement 1 is false and statement 2 is true

Both statements 1 and 2 are true

Both statements 1 and 2 are false

26. The government organisation that regulate education sector is/are:

NCERT

ICMR

UGC

Both (a) and (c)

27. The major share of total education expenditure is taken by______________.

Elementary education

Higher education

Secondary education

Technical education

28. ‘Since independence India has witnessed a considerable fall in Infant Mortality Rate.’ Identify which of the following may not be one of the reasons

for the fall in Infant mortality rate?

Improvement in educational standards over the years

Improvement in health facilities over the years

Technological expansion over the years

Fall in standard of living of population over the years

29. The Adult Literacy Rate among males in India in the year 2000 was:

68.4 per cent

61.9 per cent

45.4 per cent

37.9 per cent

30. Which of the following is not a source of human capital formation?

On-the-job training

Migration

Education

None of these

Question 1 of 30