ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Capital goods serve a critical role in the economy. When companies invest in capital goods, they expand their ability to create products and services. This allows businesses to make a profit and hire employees, and can result in economic growth for society as a whole.

Detailed explanation-2: -In the long term, a larger physical capital stock increases the economy’s overall productive capacity, allowing more goods and services to be produced with the same level of labor and other resources.

Detailed explanation-3: -Sometimes considered synonymous with durable goods-since both usually provide value for a very long time-capital goods are the factories, tools and equipment used by businesses in the course of producing their products or providing their services.

Detailed explanation-4: -Capital goods are physical assets that a company uses in the production process to manufacture products and services that consumers will later use. Capital goods include buildings, machinery, equipment, vehicles, and tools. Capital goods are not finished goods, instead, they are used to make finished goods.