Question

TRUE OR FALSE.

Cyclical changes create emergency demands for fixed capital.

Answer 1

This statement is false.

Explanation:

Cyclical changes (like seasonal demand or economic cycles) create emergency demands for working capital, not fixed capital.

• Fixed capital is needed for long-term investments (like machinery, buildings, etc.).
• Working capital is used to manage short-term, day-to-day needs, especially during seasonal fluctuations or emergencies.