UPSC Prelims 2024 · Question 87 of 97
UPSC Prelims 2024 question on Physical Capital Categories
- ExamUPSC CSE
- Year2024
- PaperGeneral Studies Paper I
- SubjectIndian Economy
- TopicImportant Economic Concepts
- DifficultyMedium
- TypeMatch
With reference to physical capital in Indian economy, consider the following pairs:
Items : Category
1. Farmer's plough : Working capital
2. Computer : Fixed capital
3. Yarn used by the weaver : Fixed capital
4. Petrol : Working capital
How many of the above pairs are correctly matched?
Show answer
Answer: B. Only two
Verdict
Correct pairs: 2 and 4 → Only two → Option (b).
Analysis
Fixed capital represents the long-term assets that contribute to a company's foundation and growth – buildings, machinery, and equipment not intended for immediate turnover.
Working capital addresses the short-term financial needs essential for day-to-day operational activities – raw materials consumed within a single production cycle.
Statement by statement
Pair 1 – INCORRECTLY MATCHED: Farmer's plough is fixed capital because it is a long-term asset that provides benefit over multiple production cycles. NOT working capital.
Pair 2 – CORRECTLY MATCHED: Computer is fixed capital – a long-term asset.
Pair 3 – INCORRECTLY MATCHED: Yarn used by the weaver is working capital because it is a raw material consumed within a single production cycle.
Pair 4 – CORRECTLY MATCHED: Petrol is working capital as it is consumed in day-to-day operations.