What are Capital Goods?
- Capital goods are long-lived assets that are used in the production of other goods and services. Unlike consumer goods, which are used for personal satisfaction, capital goods are essential tools, machinery, or equipment that businesses use to manufacture products or provide services.
How Do I Remember It?
- Think of capital goods as the tools and equipment businesses use to create other things. They are like the behind-the-scenes players, not directly consumed by individuals but crucial for the production process.
Real World Example
- Machinery used in manufacturing plants, computers in office spaces, or specialized equipment in construction are examples of capital goods. These items are pivotal in the production of goods and services but are not the final products consumed by end-users.
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