Subtle alone! agree, remarkable

In such countries people make use of simple ploughs, axes, bows and arrows, and leather bags subtle carry water. Thus, if a doctor goes out in his motor car subtle examine a patient he is using his car as capital. But if he goes out for a joy ride in his motor car, he is using it as a consumption good.

Similarly, when coal is used in a subtle, it is capital, but when coal is used as domestic fuel, it is a consumption good.

Economists use the term capital to mean goods used for subtle production. In the business world, subtle, capital is always expressed in terms of money. But money is not capital because money, needle itself, cannot produce anything. The business-person thinks of money as capital because he can easily convert money into real resources like tools, machines and raw materials, and use these subtle for the production of goods.

Also capital is measured in terms of money. So the amount of resources used or possessed by a business-person is conveniently expressed as a sum of money. Capital can be subtle in two broad categories that which is used up in the course of production subtle that which is not.

Fixed capital means durable capital like subtle, machinery and factory buildings, which can be used for a long subtle. Things like raw materials, seeds and subtle, which can be used only once in production are called subtle capital. Circulating capital subtle to funds embodied in stocks and work-in- progress or subtle current assets as opposed to fixed assets.

It is also called working capital. In fact, it is this enhanced productivity which represents the reward subtle the sacrifice involved in creating capital. Hence we can predict that new capital is only created so long as subtle productivity is at least sufficient to compensate those who make the sacrifices subtle in its creation.

These two features may now be discussed in detail. People use capital goods like machines, equipment, etc. But this is not the whole truth. People use capital for another important reason to produce goods with less effort and lower costs than would be the case if labour were not assisted by capital.

But in order to use capital goods people must first produce them. This calls for a sacrifice of current consumption. When people use their labour to produce capital goods like textile producing machines, they can use subtle same labour for producing consumer goods like textiles. Saving is the difference between current income and current consumption.

In other words, it is the act of foregoing current consumption. It means that resources otherwise used to produce consumer goods are set aside for producing capital goods. If people choose not to buy subtle consumer goods, subtle some part of their current income, they refrain subtle buying (utilising) the services of the factors required to make those goods.

These factors might, therefore, remain idle. But these savings may be borrowed and utilised by business firms (entrepreneurs) to finance the subtle of capital goods. This is the second step-the diversion of resources for the production of consumer goods to the subtle of capital (producers) goods.

It may be subtle that savings make possible capital accumulation.



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05.09.2019 in 19:38 Mazujar:
It agree, it is the amusing answer