What is capital and how does it work?

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What is capital and how does it work?

In: Economics

3 Answers

Anonymous 0 Comments

This is unclear, are you referring to capital, as in financial capital?

Anonymous 0 Comments

Capital is basically money. In the financial world, having capital means having funds to invest in some sort of asset, whether that means buying another company, building a factory, buying inventory, etc.

Anonymous 0 Comments

Capital is money you use to make money.

* For example, say you are a farmer. You own a tractor, which you use to grow crops. The tractor is capital.

* Now say you sell the tractor for $10,000, that $10,000 is capital. You can use it to buy something that will make you money.

* Now you use the $10,000 to buy an oven. You now use that oven to bake bread, which you sell. That oven is capital.

* Now you sell that oven and use the money to pay tuition at a community college where you learn how to program software. That knowledge is capital. You use that knowledge to program software, which you sell.