Question

Mention two functions of capital.

What is the significance of capital in promoting economic growth?

Discuss the importance of capital in the modern system of production.

Explain three important functions of capital.

Answer 1

1. It increases the productivity of land and labour.
2. Capital increases economic growth and employment opportunities, particularly in countries where labour is plentiful. Capital is necessary to employ more workers.
3. Capital is used to provide the necessary tools and implements to the workers for productivity purposes. It is also used to extract goods from nature.
4. Without capital, there can be no production. Capital makes the use of advanced modem machines in production possible. Moreover, no technological progress is possible without capital.

Answer 2

1. It increases the productivity of land and capital.
2. It increases employment opportunities particularly in those countries where labour is in plenty.