Question

Steel is an example of ______.

Options

• floating capital

• sunk capital

• fixed capital

• working capital

Answer 1

Steel is an example of floating capital.

Explanation:

• Floating capital, also called non-specialised capital, refers to capital that can be put to several different uses easily. It is not tied to a single specific purpose.
• For example, a typewriter remains useful even if the production focus changes within a company.
• Steel is considered floating capital because it can be used in various ways in production processes and is not restricted to a single specialized use.

This classification differs from “fixed capital”, which includes things like machines or buildings used repeatedly for the same purpose over long periods.

Thus, steel is floating capital because it is a material that is used up or transformed in production and is flexible for different production needs, unlike fixed capital which is more permanent and specific in its use.