Question

INCOME IN THE FORM OF CAPITAL GAIN IS THE PART OF CAPITAL FORMATION?

Answer 1

Answer:

Capital formation is referred to as the accumulation of the net capital over an accounting period for a specific nation. The term capital formation also refers to the addition of capital goods, such as tools, equipment, electricity, and transportation assets.

Countries require capital goods to substitute the older ones that are utilised to produce a given product or service. If a nation is unable to substitute capital goods on reaching the end of their lives, then the production is going to go on the southward direction. Usually, the higher the capital formation in the economy, the faster it grows to generate income.