Capital goods, the part of final goods other than consumer goods, are purchased mainly by:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → business enterprises, to maintain or add to capital stock
Capital goods are bought by business enterprises, to replace worn-out capital or to add to their capital stock.
Option (1) business enterprises, to maintain or add to capital stock — Correct. Firms buy capital goods for maintenance of or addition to their capital stock.
Option (2) the government, to make transfer payments — Incorrect. Transfer payments are money payments; they do not need capital goods.
Option (3) foreign buyers, as part of the country's exports — Incorrect. Exports go to foreign buyers, but capital goods are bought mainly by firms.
Option (4) households, to meet the immediate needs of the family — Incorrect. Goods for the family’s immediate needs are consumer goods.
NCERT (2026-27): “2.1 Some Basic Concepts of Macroeconomics … The other part of the final goods, the capital goods, are purchased by business enterprises. They are used either for maintenance of the capital stock because there are wear and tear of it, or they are used for addition to their capital stock. …” |