Civil Services Prep

Prelims 2024 · Economy · Question 87

With reference to physical capital in Indian economy, consider the following pairs: Items - Category: 1. Farmer's plough - Working capital 2. Computer - Fixed capital 3. Yarn used by the weaver - Fixed capital 4. Petrol - Working capital. How many of the above pairs are correctly matched?

  1. Only one
  2. Only two
  3. Only three
  4. All four

Answer

Only two

1. Farmer's plough – Working capital: Incorrect. A plough is a durable tool used repeatedly in production, so it is fixed capital.

2. Computer – Fixed capital: Correct. A computer is a durable asset used over many production cycles, hence fixed capital.

3. Yarn used by the weaver – Fixed capital: Incorrect. Yarn is a raw material consumed in production, so it is working capital.

4. Petrol – Working capital: Correct. Petrol is used up in the production/transport process, so it is working capital.

Thus, only two pairs are correctly matched.

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