The decision to invest in human capital is influenced by considerations similar to those that motivate a firm to invest in physical capital. Therefore, if interest rates rise, fewer people will tend to invest in college education, since this is an investment that commonly involves borrowing money to afford tuition.

Question

Quizplus · Accepted Answer

The statement correctly identifies that the decision to invest in human capital is similar to investing in physical capital, and that rising interest rates can discourage investment in college education due to the need to borrow money for tuition.

The Decision to Invest in Human Capital Is Influenced by Considerations