A country raises its expenditure on education and training. It finances this by cutting unemployment benefit payments and by increasing taxes on machinery imports. What is the most likely impact of these changes? (Effects on physical capital and human capital shown in options.)
- Aphysical capital decreases, human capital decreases
- Bphysical capital increases, human capital decreases
- Cphysical capital decreases, human capital increases
- Dphysical capital increases, human capital increases