Q. With reference to physical capital in the 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 pairs given above are correctly matched?
(a) Only one
(b) Only two
(c) Only three
(d) All four
Correct answer: (b) Only two
Question from UPSC Prelims 2024 GS Paper
Explanation:
1. Farmer’s plough – Working capital
This is incorrect. A farmer’s plough is a tool used over multiple production cycles and is considered fixed capital, not working capital.
2. Computer – Fixed Capital
This is correct. Computers are durable goods used over multiple production cycles and are considered fixed capital.
3. Yarn used by the weaver – Fixed capital
This is incorrect. Yarn is a raw material that is transformed during the production process and is considered working capital, not fixed capital.
4. Petrol – Working capital
This is correct. Petrol is consumed in the production process and needs to be replenished regularly, making it working capital.
The answer is (b) Only two.