With reference to the 'Capital formation' which of the following statements is /are correct ? 1). Process of capital formation depends on savings and effectiveness of financial institutions. 2). Investment is the essential factor of capital formation. Select the correct answer using the codes given below. Codes :

Question

CollectorBabu · Accepted Answer

Correct Answer: Both 1 and 2. Capital is the most important factor of production particularly in a developing economy. Capital Formation is defined as that part of country’s current output and imports which is not consumed or exported during the accounting period, but is set aside as an addition to its stock of capital goods. Total Capital Formation can be broadly classified into Gross Fixed Capital Formation Change in stock of raw materials, semi-finished and finished goods. Hence option C is correct .

Contact Information

Services