With reference to physical capital in Indian economy, consider the following pairs: Items Category1. Farmer’s plough Working capital2. Computer Fixed capital3. Yarn used by the weaver Fixed capital4. Petrol Working capitalHow many of the above pairs are correctly matched ?
✓ Correct answer: b) Only two
ExplanationPhysical capital refers to tangible, man-made assets that businesses purchase or invest in to produce goods or services.It is part of one of the three factors of production, alongside land (natural resources) and labor (human resources).Physical capital includes assets like machines, vehicles, computers, and buildings.It is categorized into two types:Fixed capital consists of long-term physical investments used repeatedly in production over multiple accounting periods.These assets, such as buildings and machinery, are not consumed during production but have a long-term value that may depreciate over time.Examples include a farmer’s plough, a computer etc.Working capital refers to liquid assets like cash, inventory, or materials that can be quickly converted into currency.It is utilized during the production process to create the final product.Yarn used by a weaver, petrol etc are examples.Pair 1 is incorrectly matched : A farmer’s plough is a long-term asset used repeatedly over many years in the production process.It is classified as fixed capital, not working capital
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