TutorOn by Sanath Withanage

Question:

Economists refer the term ‘capital’ exclusively to
(1) human-made goods which are used to produce other goods and services.
(2) money used to purchase capital in the form of stocks and bonds.
(3) savings accumulated by households to purchase capital.
(4) money used by an entrepreneur to purchase capital.
(5) real estate, forests, metals, and mineral resources.

Correct Answer:

(1)

Answer Explanation:

In economics, ‘capital’ does not refer to financial assets like money or stocks. Instead, physical or real capital refers exclusively to human-made resources (such as machinery, buildings, and tools) used in the production process to create other goods and services.

Topic: Factors of Production Year: 2020