Distinguish between physical capital and financial capital and give two examples of each
What will be an ideal response?
Physical capital is the actual tools, instruments, machines, buildings and other items that have been produced in the past and are presently used to produce goods and services. Financial capital is the funds that businesses use to acquire their physical capital. Examples of physical capital are the pizza ovens owned by Pizza Hut and the buildings in which the Pizza Huts are located. Examples of financial capital are the bonds issued by Pizza Hut to buy pizza ovens and the loans Pizza Hut has made to fund their purchases of new buildings.
You might also like to view...
Internal improvements are important to a developing and growing economy
Indicate whether the statement is true or false
A decrease in the price level will _____
a. shift the consumption function upward b. shift the consumption function upward c. result in an upward movement along the consumption function d. result in a downward movement along the consumption function e. shift the consumption function downward