Question:
What is the difference between investment and capital formation?
See Also
What is Capital? | DefinitionIs Capital The Same As Equity In Business?What is Capital? Definition of Capital, Capital Meaning - The Economic TimesWhat Are Some Examples of Different Types of Capital?Capital:
Capital is one of the factors of production that refers generally equipment, tools, machinery, and land. Capital formation in an economy is an indicator of the growth in the economy.
Key Vocabulary and Terms:
- Infrastructure: A generalized term for the bridges, roads, airports, and shared capital goods which an economy uses to produce goods and services. It is also sometimes referred to as capital stock.
- Firm: A term for a private producer. Firms are responsible for the production of goods and services in a market-based economy.
- Interest Rates: Firms often borrow money to expand their operations. Their decision to expand is often dependent on the price of borrowing or interest rates facing their projects.
Answer and Explanation:1
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In economics, capital formation implies the addition to the current stock of capital. Investment refers to the net additions to the capital stock of...
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