ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Answer and Explanation: It is not true that capital refers to money only. Capital can be in monetary and non-commodities. Generally, capital refers to liquid assets or money that are got to cater for expenses.

Detailed explanation-2: -What Does Capital Mean in Economics? To an economist, capital usually means liquid assets. In other words, it’s cash in hand that is available for spending, whether on day-to-day necessities or long-term projects.

Detailed explanation-3: -Money is not capital as economists define capital because it is not a productive resource. While money can be used to buy capital, it is the capital good (things such as machinery and tools) that is used to produce goods and services.

Detailed explanation-4: -Capital is the factor of production that enhances the productivity of labor. From the perspective of an economist, it is not a financial asset like shares of stock or money.