ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Capital is a broad term for anything that gives its owner value or advantage, like a factory and its equipment, intellectual property like patents, or a company’s or person’s financial assets. Even though money itself can be called capital, the word is usually used to describe money used to make things or invest.

Detailed explanation-2: -Stocks and bonds. The physical plants, equipment and machinery are examples of capital as they are used to manufacture goods or products for customers. On the other hand, stocks and bonds are investments which may yield returns to the investor but they are not capital as they cannot facilitate manufacturing of goods.

Detailed explanation-3: -You might ask, isn’t money a type of capital? 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: -Financial (Economic) Capital. Financial capital is necessary in order to get a business off the ground. Human Capital. Human capital is a much less tangible concept, but its contribution to a company’s success is no less important. Social Capital.