Question

4. What is Capital formation? What are the various stages in capital formation?​

Answer 1

Answer:

The stages are: 1. Creation of savings 2. Conversion of savings into investment 3. The actual production of capital goods.

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Answer 2

✍️ANSWER✍️

ᴄᴀᴘɪᴛᴀʟ ғᴏʀᴍᴀᴛɪᴏɴ ɪs ᴅᴇғɪɴᴇᴅ ᴀs ᴛʜᴀᴛ ᴘᴀʀᴛ ᴏғ ᴄᴏᴜɴᴛʀʏ's ᴄᴜʀʀᴇɴᴛ ᴏᴜᴛᴘᴜᴛ ᴀɴᴅ ɪᴍᴘᴏʀᴛs ᴡʜɪᴄʜ ɪs ɴᴏᴛ ᴄᴏɴsᴜᴍᴇᴅ ᴏʀ ᴇxᴘᴏʀᴛᴇᴅ ᴅᴜʀɪɴɢ ᴛʜᴇ ᴀᴄᴄᴏᴜɴᴛɪɴɢ ᴘᴇʀɪᴏᴅ, ʙᴜᴛ ɪs sᴇᴛ ᴀsɪᴅᴇ ᴀs ᴀɴ ᴀᴅᴅɪᴛɪᴏɴ ᴛᴏ ɪᴛs sᴛᴏᴄᴋ ᴏғ ᴄᴀᴘɪᴛᴀʟ ɢᴏᴏᴅs.

ᴛʜʀᴇᴇ sᴛᴀɢᴇs ɪɴ ᴄᴀᴘɪᴛᴀʟ ғᴏʀᴍᴀᴛɪᴏɴ:

ᴛʜᴇʀᴇғᴏʀᴇ, ɪɴ ᴀ ᴍᴏᴅᴇʀɴ ғʀᴇᴇ ᴇɴᴛᴇʀᴘʀɪsᴇ ᴇᴄᴏɴᴏᴍʏ, ᴛʜᴇ ᴘʀᴏᴄᴇss ᴏғ ᴄᴀᴘɪᴛᴀʟ ғᴏʀᴍᴀᴛɪᴏɴᴄᴏɴsɪsᴛs ᴏғ ᴛʜᴇ ғᴏʟʟᴏᴡɪɴɢ ᴛʜʀᴇᴇ sᴛᴀɢᴇs:

• (ᴀ) ᴄʀᴇᴀᴛɪᴏɴ ᴏғ sᴀᴠɪɴɢs:

• (ʙ) ᴍᴏʙɪʟɪᴢᴀᴛɪᴏɴ ᴏғ sᴀᴠɪɴɢs:

• (ᴄ) ɪɴᴠᴇsᴛᴍᴇɴᴛ ᴏғ sᴀᴠɪɴɢs:

• ᴄʀᴇᴀᴛɪᴏɴ ᴏғ sᴀᴠɪɴɢs:

• ᴍᴏʙɪʟɪᴢᴀᴛɪᴏɴ ᴏғ sᴀᴠɪɴɢs:

• ɪɴᴠᴇsᴛᴍᴇɴᴛ ᴏғ sᴀᴠɪɴɢs ɪɴ ʀᴇᴀʟ ᴄᴀᴘɪᴛᴀʟ:

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