Capital is the man-made physical goods employed to generate other goods and services. In usual language, capital means money. In Economics, capital refers to that portion of man-made wealth that is employed for the further production of wealth. According to Marshall, “Capital comprises of such kinds of wealth other than free gifts of nature that yield income”.

Money is considered as capital since it can be employed to buy raw materials, tools, and machinery for production. The word capital and wealth are not identical. Capital is that portion of wealth that is employed for the further production of wealth. Therefore, all wealth is not capital however all capital is wealth.

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