Capital Formation

Added By MaihanNijat - Feb 19, 2012 - Economics


The act of increasing the stock of capital in the economy is given the name of Capital Formation. Capital formation means a situation where the society does not consume whole of its current income but directs a part of it for making capital goods like instruments, machines, plants, equipments, transport facilities, finished & semi-finished good. All this means that capital formation is the process whereby a part of society’s available resources are diverted to increase the stock of capital goods so that the output could be expanded in the future.




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