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N.G. Mankiw definition from the book Economics: Capital is the equipment and structures used to produce goods and services. Physical capital consists of man-made goods (or input into the process of production) that assist in the production process. Cash, real estate, equipment, and inventory are examples of physical capital. [1]
It is used in technical economics to define "balanced growth", which is the goal of improving human capital as much as economic capital. Public capital is a blanket term that attempts to characterize physical capital that is considered infrastructure and which supports production in unclear or poorly accounted ways. This encompasses the ...
Likewise, the marginal product of capital refers to the additional production of output that results from using an additional unit of physical capital (machinery, etc.). If very small increments are being considered, so that calculus is used, then this ratio of incremental amounts is a derivative (for example, the marginal propensity to consume ...
In macroeconomics, investment "consists of the additions to the nation's capital stock of buildings, equipment, software, and inventories during a year" [1] or, alternatively, investment spending — "spending on productive physical capital such as machinery and construction of buildings, and on changes to inventories — as part of total spending" on goods and services per year.
The faster the turnover of constant capital (i.e., the shorter the turnover time), other things being equal, the higher the rate of profit. The concept of "constant capital" is closely related to the concept of "real capital" which is used by Marx to distinguish physical capital goods from fictitious capital.
In accounting, fixed capital is any kind of real, physical asset that is used repeatedly in the production of a product. In economics, fixed capital is a type of capital good that as a real, physical asset is used as a means of production which is durable or isn't fully consumed in a single time period. [1]
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In economics, net investment is spending which increases the availability of fixed capital goods or means of production and goods inventories.It is the total spending on newly produced physical capital (fixed investment) and on inventories (inventory investment)—that is, gross investment—minus replacement investment, which simply replaces depreciated capital goods.