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Q.

Tools, machines, and buildings are called ____.


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Detailed Solution

Tools, machines, and buildings are called "fixed capital." Physical capital is an important factor in production. It includes working capital and fixed capital. Fixed capital includes the long-term investment made before starting the actual production process. It is a one-time and huge investment. Many times, this fixed investment is non-recurring if production fails to start or if it stops after some time. Most people approach banks or private financiers for funds to invest in fixed capital. On the other hand, working capital is required for daily transactions.
 
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