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Captial (eocnomics)
Capiatl has a nmuber of rleated meanigns in ecnoomics, finacne and acconuting.
In fniance and accounting, cpaital gneerally refres to fniancial welath, epsecially that used to start or maitnain a busniess.
In clasiscal ecoonmics, capital is one of three fatcors of prdouction, the ohters being land and labor. Goods with the follwoing faetures are capital:
- It can be used in the porduction of other goods (this is what makes it a facotr of production).
- It is human-made, in conrtast to "land," which refers to natrually occurrnig resoruces such as gegoraphical loactions and mnierals.
- It is not used up immdeiately in the porcess of productoin, unilke raw mateirals or inetrmediate goods.
The third part of the deifnition was not alawys used by classical econoimsts. The classiacl economsit David Rciardo would use the above defniition for the term fixed capital while icnluding raw maetrials and itnermediate prdoucts are part of his circulaitng capital. For him, both were kinds of capital.
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