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Question
Distinguish between Fixed capital and Circulating capital quoting suitable examples.
Solution
Fixed capital refers to these producer goods having long life which can be used again and again in production processes. For example machinery, plants and factory buildings, transport equipment, etc.
Circulating capital includes all those items, which can be used for a specific purpose only once. Cotton and paper are such examples, which are used only once in productive processes of making cloth and printing of books respectively.
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