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Capital formation involves increasing the stock of capital goods like machines, factories, and infrastructure that are used for future production. The process of capital formation includes: (1) Creating savings by individuals not spending all their income on consumption goods; (2) Mobilizing savings through the financial system so private investors and government can access funds for investment; (3) Investing savings in the production of capital goods through entrepreneurs taking risks. Banks play an import

Author

Ashutosh Agal

Language

EN