What is capital? | GDP: Measuring national income | Macroeconomics | Khan Academy | Summary and Q&A

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May 27, 2015
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What is capital? | GDP: Measuring national income | Macroeconomics | Khan Academy

TL;DR

Capital is a broad term that encompasses various inputs required for production, such as land, resources, equipment, supplies, and labor.

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Questions & Answers

Q: What does capital encompass as a factor of production?

Capital includes inputs like land, water, equipment, supplies, and resources that are necessary for production.

Q: How is capital viewed in a narrow sense?

In a narrow sense, capital refers to equipment, supplies, and other tangible assets used in production.

Q: How is capital viewed in a broader sense?

In a broader sense, capital includes all inputs except labor, encompassing land, resources, equipment, supplies, and more.

Q: What is return on capital?

Return on capital measures the income generated from the employed capital. It is expressed as a percentage and represents the return on investment.

Summary & Key Takeaways

  • Capital, as a factor of production, encompasses inputs such as land, water, equipment, supplies, and labor.

  • Capital can be viewed in a narrow sense, referring to equipment and supplies, or in a broader sense, including all inputs except labor.

  • Return on capital measures the income generated from the employed capital and is expressed as a percentage.

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