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What role does the public sector play in capital formation?
  • a)
    It discourages private investments
  • b)
    It reduces the overall savings in the economy
  • c)
    It can be a source of investment through profits of public undertakings
  • d)
    It relies solely on foreign capital for investment
Correct answer is option 'C'. Can you explain this answer?
Verified Answer
What role does the public sector play in capital formation?a)It discou...
The public sector can contribute to capital formation by using the profits generated by public undertakings for further investment. These profits can be reinvested in building real capital goods, such as infrastructure, factories, and equipment, which contribute to economic growth.
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