Capital formation, Microeconomics

Capital formation:

Growth Economists believe that accumulation of capital is one main source of growth of an economy. Emphasis is given to the accumulation of more capital per head (machines, factories, roads etc.). It should however be noted that mere accumulation of capital will not fuel growth. Unless there are areas of investment unexploited, productive capacity cannot be increased merely by increasing the stock of capital.Capital is also only one of the many productive factors of production. If it is increased relative to other factors of production its marginal efficiency falls (MEC).

Technology:

Expansion of knowledge through science and engineering that leads to new inventions and innovations in production techniques play an important role in growth. Technology can either be developed internally or can be imported from other countries.

Posted Date: 1/3/2013 1:00:44 AM | Location : United States







Related Discussions:- Capital formation, Assignment Help, Ask Question on Capital formation, Get Answer, Expert's Help, Capital formation Discussions

Write discussion on Capital formation
Your posts are moderated
Related Questions
Problem: i) Differentiate between economic development and economic growth. ii) Describe carefully how, using the expenditure approach, national income is calculated. ii

Problem: (a) Define money and briefly explain its core functions. (b) Explain the relationship between interest rate and price of bonds, illustrate using example. (c)

Fiera Corporation is evaluating a new project that costs $45,000.  The project will be financed using 40% debt and 60% equity, thus maintaining the firm's current debt-to-equity ra


RECENT DEVELOPMENT OF DEMAND THEORY:  The basic theory of consumer behaviour discussed in the previous unit can be extended in many directions, and can be applied to cover opt

Problem 1 (a) Explain the evolution of exchange rate system in Mauritius. (b) According to you, what factors determine exchange rates in the long run? Problem 2 "Inf

what are the practical importance of income elasticity of demand?

plot the demand schedule and draw the demand curve for the data given for marijuana in the case above

what is iso curve

price effect