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?
Answer & explanation
Answer: (b) Only two
Fixed capital is durable equipment that keeps yielding service for years. Working capital is what production uses up, such as raw materials and fuel. So the computer (fixed) and petrol (working) are matched correctly, while the plough is fixed capital and the weaver's yarn is working capital.
- ✗ 1. A plough is a durable implement used season after season. It is fixed capital, not working capital.
- ✓ 2. A computer is a machine that serves for years without being consumed, so it is fixed capital.
- ✗ 3. Yarn is a raw material that is used up in making cloth. NCERT places raw materials like cloth among working-capital needs and sewing machines and handlooms among assets, so yarn is working capital.
- ✓ 4. Petrol is burnt up when used, an input consumed in production, so it is working capital.
Remember · Fixed capital: durable tools and machines that serve for years. Working capital: inputs used up in production, such as raw materials and fuel.
📘 Read it in NCERT: Class 12 Introductory Macroeconomics, Ch 4 (practise this chapter) · Class 10 Understanding Economic Development, Ch 3 (practise this chapter)
Sources
- NCERT Class 12 · Introductory Macroeconomics, Chapter 4 “Machines produced in an economy in a given year are not 'used up' to produce other goods but yield their services over a number of years.”
- NCERT Class 10 · Understanding Economic Development, Chapter 3 “for meeting working capital needs (e.g. buying seeds, fertilisers, raw materials like bamboo and cloth), for housing materials, for acquiring assets like sewing machine, handlooms, cattle, etc.”
Question and answer: UPSC's official GS Paper I (2024, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). ·