With reference to physical capital in Indian economy, consider the following pairs :
| Items | Category | |
|---|---|---|
| 1. | Farmer’s plough | Working capital |
| 2. | Computer | Fixed capital |
| 3. | Yarn used by the weaver | Fixed capital |
| 4. | Petrol | Working capital |
How many of the above pairs are correctly matched ?
Only one
Only two
Only three
All four
Answer is Right!
Answer is Wrong!
This question was previously asked in
UPSC IAS – 2024
1. Farmer’s plough is used repeatedly over many production cycles. This is a tool/machine and is considered Fixed Capital, not Working Capital (which is consumed or transformed in the production process). So, Pair 1 is incorrectly matched.
2. A Computer is a durable asset used in production or work over a long period. This is correctly categorized as Fixed Capital. So, Pair 2 is correctly matched.
3. Yarn is a raw material that is used up or transformed during the weaving process to create fabric. This is correctly categorized as Working Capital, not Fixed Capital. So, Pair 3 is incorrectly matched.
4. Petrol is a fuel that is consumed during production (e.g., running machinery, vehicles). This is correctly categorized as Working Capital, not Fixed Capital. So, Pair 4 is correctly matched.
Only pairs 2 and 4 are correctly matched. Therefore, the number of correctly matched pairs is two. Option B is the correct answer.
– Fixed Capital: Assets that are used repeatedly over a long period in the production process (e.g., machinery, tools, buildings, computers).
– Working Capital: Assets that are consumed or transformed during the production process (e.g., raw materials, fuel, intermediate goods, cash on hand).