Raw material and money in hand are examples of
(a) Capital growth
(b) Fixed capital
(C) Working capital
(d) Investment
Answers
Answer:
working capital is the answer of your Q
Answer:
Meaning of Capital:
The term capital is used in economics in various senses. In ordinary language and sometimes in economics also capital is used in the sense of money.
But when we talk of capital as a factor of production, to confuse capital with money is quite wrong. Of course, money is used to purchase various factors such as raw materials, machinery, labour which help to produce goods, but money itself does not directly help in the production of goods.
Fixed Capital and Working Capital:
Capital may be classified into fixed capital and working capital. Fixed Capital is durable-use producer goods which are used in production again and again till they wear out. Machinery, tools, railways tractors, factories etc., are all fixed capital.
Fixed capital does not mean fixed in location. Capital like plant, tractors, and factories are called fixed because money spent upon these durable goods, remains fixed or unrealised for a long period in contrast with the money spent on purchasing raw materials which is recovered as soon as goods made with them are sold.
Human Capital:
We have explained above the concept of physical capital. For a long time in economics, it was thought that it was the physical capital which played a crucial role in expanding production. In recent years, a new concept of ‘human capital’ has been evolved and emphasised.