Question

Which of the following statements defines the term 'Capital' more appropriately?

• A. Capital is a flow concept
• B. Capital is the asset created by human efforts and not available in a natural form
• C. Capital is the same as money
• D. Capital is comprised of only tangible assets

Hint:

Capital is a human-made resource used to produce other goods and services. It's a stock concept, not a flow. Think of factories, tools, and skills as examples.

Answer 1

The Correct Option is B

In economics, capital refers to produced assets used in the production of goods and services. These assets are created through human effort and ingenuity, distinguishing them from natural resources like land. Capital can be physical (machinery, buildings, infrastructure) or intangible (knowledge, skills, patents). While money can be used to acquire capital, money itself is not capital; it's a medium of exchange. Option (1) is incorrect because capital is a stock concept (representing a quantity at a specific point in time), not a flow concept (measured over a period). Option (4) is too narrow, as capital includes intangible assets as well.