Capital theory

Capital theory explores how investments in physical assets like machinery, buildings, or tools contribute to the production process and overall economic growth. It examines how these assets, called 'capital,' enable workers to be more productive, leading to increased output and income. The theory considers how capital is accumulated over time, influenced by savings and investments, and how it interacts with other factors like labor and technology. Essentially, it helps us understand the role of tangible assets in creating goods and services, driving economic development, and shaping how resources are allocated in an economy.