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What is the primary purpose of capital formation in an economy?
  • a)
    To increase current consumption
  • b)
    To reduce the overall income levels
  • c)
    To create a stock of capital goods for future production
  • d)
    To generate inflationary pressures
Correct answer is option 'C'. Can you explain this answer?
Verified Answer
What is the primary purpose of capital formation in an economy?a)To in...
Capital formation refers to the process of creating a stock of capital goods such as machines, tools, factories, and equipment that can be used for future production. This process involves saving and investing resources to build up the productive capacity of the economy, leading to increased production and economic growth.
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What is the primary purpose of capital formation in an economy?a)To increase current consumptionb)To reduce the overall income levelsc)To create a stock of capital goods for future productiond)To generate inflationary pressuresCorrect answer is option 'C'. Can you explain this answer?
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