Tag: economy of a village

Questions Related to economy of a village

Which capital includes durable consumer goods, inventories and intermediate goods?

economics concept of consumption function, saving function and investment function capital economy of a village wealth, capital and money

  1. Human capital.

  2. Physical capital.

  3. External capital.

  4. Floating capital.

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Correct Option: D

"Capital is the produced means of production". Who gave this definition?

economics concept of consumption function, saving function and investment function capital economy of a village wealth, capital and money

  1. Bohm Bawerk

  2. J.K. Hicks

  3. Von Sickle and Roger

  4. Prof. Samuelson

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Correct Option: A
Explanation:

Bohm Bawerk proclaimed that "Capital is the produced means of production". Capital is already a produced means as other factors of production are used to produce capital in an economy.

Which of the following is/are the stages of capital formation?

economics concept of consumption function, saving function and investment function capital economy of a village wealth, capital and money

  1. Creation of savings

  2. Effective mobilization of savings

  3. Investment in savings

  4. All of these

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Correct Option: D
Explanation:
The three stages of capital formation are:-
1) Creation of savings-Collective savings of individuals in an economy leads to creation of savings.
2) Effective mobilization of savings-Savings should be properly allocated to different purposes.
3) Investment in savings-Savings should be properly invested by the economy which will yield better productivity and help to increase the rate of existing capital formation.

Why is capital a passive factor of production?

economics concept of consumption function, saving function and investment function capital economy of a village wealth, capital and money

  1. Because it becomes ineffective without cooperation of labour

  2. Because it becomes ineffective without land

  3. Because it becomes ineffective without entrepreneurs

  4. Because it becomes ineffective without natural resources

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Correct Option: A
Explanation:

Without the presence of labour factor of production ,capital is of no use,hence capital is a passive factor of production. Without labour , capital will not get utilized in the production mechanism. Capital without the accompany of the labour cannot produce any goods and services in an economy.

Capital Formation means ___________________.

economics concept of consumption function, saving function and investment function capital economy of a village wealth, capital and money

  1. A sustained increase in the stock of real capital in a country.

  2. Production of more capital goods, which are used for further production of goods.

  3. Investment

  4. All of the above

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Correct Option: D