Tag: economy of a village

Money invested to run an organization and fixed assets like tools,machines,and equipment- both are termed as 'capital' in economics as both help the production process to improve.

Addition to the existing stock of capital leads to increase in investment and capital formation in an economy.

Social overhead capital includes all the 'basic' services required in the production process such as,transport,irrigation,energy,education,health and medical facilities.

Over the years the rate of accumulation of net capital during a particualar accounting period has increased as the skill and knowledge of labour are increasing day by day ,which in turn is increasing the productive capacity of an economy.

Capital  as a factor of production,possess great mobility as it can be transferred from one place to another instantly.

Capital, as a factor of production, includes both assets like machines, equipment, etc and money-which are important to maintain the smooth functioning of the production process.

Capital refers to man-made goods used in the production process. Forests are considered natural resources or land, not man-made capital.

Plant and machinery are classic examples of man-made capital goods used to produce other goods and services, whereas land, water, and air are natural resources.

Units of capital employed to produce a certain level of output divided by total units of output gives us the capital output ratio. It is measured in order to check the efficiency and effectiveness of an organization.