Use of Capital

Chapter 2 page 26

Capital savings are useles by themselves. Only when they are harnessed productively do they gain economic significance. Such utilization may take the form of either direct or indirect investments.

- Capital savings can be used directly by, for example, a couple investing their savings in a home; a government investing in a new highway or hospital, or a domestic or foreign company paying start-up costs for a plant to produce a new product.

- Capital savings can also be harnessed indirectly through the purchase of such representational items as stocks, bonds or mutual funds or through the deposit of savings in a financial institution.

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