Economic Theory of Capital

The Economic Theory of Capital explains how resources used to produce goods and services—like machinery, tools, or buildings—are accumulated and valued over time. It emphasizes that investing in capital enhances productivity and income, balancing consumption today with investment for future growth. Capital is more than money; it’s the assets that help produce wealth. The theory also looks at how capital is allocated efficiently to maximize economic output, considering factors like interest rates, depreciation, and returns on investments. Overall, it highlights the crucial role of capital in fostering economic development and sustained prosperity.