The distinction between physical and financial capital is that
A) physical capital is equal to financial capital plus depreciation.
B) financial capital is used to purchase and operate physical capital.
C) the value of financial capital depends on the amount of available physical capital.
D) physical capital is equal to financial capital minus depreciation.
E) financial capital depreciates and physical capital does not.

Question

Quizplus · Accepted Answer

Physical capital refers to tangible assets such as machines and buildings, while financial capital refers to money and other financial assets that can be used to purchase and operate physical capital. Therefore, choice B is the best answer as it accurately describes the relationship between the two types of capital.

The Distinction Between Physical and Financial Capital Is That