With reference to physical capital in the Indian economy, consider the following pairs:

Question

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?

(a) Only one
(b) Only two
(c) Only three
(d) All four

Answer 1

(b) Only two

Explanation:

• Farmer’s plough - Working capital: Incorrect. A farmer’s plough is considered fixed capital because it is a long-term asset used in the production process.

• Computer - Fixed capital: Correct. A computer is a fixed capital as it is a durable good used in the production process over a long period.

• Yarn used by the weaver - Fixed capital: Incorrect. Yarn is working capital because it is a raw material that gets used up in the production process.

• Petrol - Working capital: Correct. Petrol is considered working capital because it is consumed in the process of running machinery and vehicles.

Therefore, pairs 2 and 4 are correctly matched, making option (b) the correct answer.