Introduction 

Capital is a crucial factor in production. In everyday language, we often use terms like wealth, capital, and money interchangeably.

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Features of Capital

(1) Man-made factor (2) Secondary Factor of Production (3) Capital is transferable

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Classification of Capital

Capital is mainly of two types:  (i) Real Capital   (ii) Financial Capital.

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(1) Fixed Capital (2) Circulating Capital (3) Floating Capital (4) Suck Capital

1. Real Capital

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2. Financial Capital

Financial capital is like paper ownership documents, such as shares,  bonds, and debentures. Owning these doesn’t directly make things or  produce goods

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Functions and Importance of Capital

(1) Basis of Production (2) Basis of Efficient Labour (3) Basis of Transport

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(1) Suitability (2) Method of Use (3) Ability of the Organiser (4) Quality of Capital

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Efficiency of Capital

1. Volume of Savings-  The volume depends upon three things. (A) Power to Save (B) Willingness to Save  (C) Facilities to save.

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Factors Affecting Capital Formation

Factors Influencing the Investment

(1) Comparison between MEC and Interest (2) Technological Advances and Innovations (3) Maintenance of machinery and operating Costs (4) Government policies

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