Tag: economy of a village

Production capital refers to that capital which is associated with the production mechanism directly. It is used in the process of production in the physical form, i.e, in the form of machines, tools, etc.

Trade capital is referred to as the amount of money entrepreneurs allocate to buying and selling goods.

Capital obtained from foreign sources and invested domestically is classified as external capital, as opposed to internal capital generated within the country.

Consumption capital is the money set aside for daily consumption purposes.

Machinery, plant, factories, canals, railways, mines, etc is the infrastructure that assists in yielding income for the society. Thus, they are known as social capital.

The capital obtained for investment purposes is obtained from an said international group. 

Collective capital is the capital owned by a group of people or a business, which is run by a group or family. In this case, all the people of the group or family collectively use the benefits derived from the utilization of that capital.

Capital is used to produce goods and services and hence is important efficient growth of an economy. 

Efficiency of labour is directly proportional to the supply of capital in an economy, thus supply of capital is increased or decreased by the efforts of man accordingly.

According to economic theory, higher income levels generally provide individuals with a greater surplus after meeting basic needs, which increases their capacity to save.