As a factor of production, capital refers to the money available to start a business A. stocks and bonds issued by businesses to raise funds B. financial investment of businesses C. currency in circulation and deposits in financial institutions D tools and machinery used to produce goods and services

Question

Danna Wolfe

Business

9 January, 21:44

As a factor of production, capital refers to the money available to start a business A. stocks and bonds issued by businesses to raise funds B. financial investment of businesses C. currency in circulation and deposits in financial institutions D tools and machinery used to produce goods and services

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Answers (1)

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Karma Mills · Answer 1

The correct statement is:

A. stocks and bonds issued by businesses to raise funds

Explanation:

When business starts, it needs money to operate, and a very effective way to obtain money is offer stocks to the public. The more stocks are bought, the more money the business raises, and this money becomes capital, which is one of the four factors of production (the other three being labor, land, and entrepreneurship).

The D statement could be true as well, because tools and machinery are also part of the capital of a company. However, the question is specifically referring to money, and while tools and machinery can become liquid (that is, can become liquid), they are money per se.