Question:medium

Which of the following statements is false?

Show Hint

Compare what physical capital and natural capital each mean.
  • Mutual understanding is a type of social capital.
  • Knowledge about how to operate a machine is intangible capital.
  • Physical capital is synonymous with natural capital.
  • Education is an investment in human capital.
Show Solution

The Correct Option is C

Solution and Explanation

Capital in economics is grouped into four broad types: physical capital (machines, tools, buildings), natural capital (land, water, minerals), human capital (skills and knowledge) and social capital (trust, networks, mutual understanding). Checking each statement against this grouping: mutual understanding fits social capital, so statement 1 holds. Machine-operating know-how fits human capital, and it is intangible since it cannot be touched, so statement 2 holds. Education builds skills, which is the definition of human capital, so statement 4 holds. Physical capital and natural capital are two different groups in this classification, one man-made and one naturally occurring, so calling them synonymous is wrong. \[\boxed{\text{Statement 3 is false}}\]
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