What are capital goods?

• A. Goods such as machines, vehicles, and buildings that are used in the production of other goods.
• B. Goods such as food and clothing used by consumers.
• C. Public services such as schools and hospitals.
• D. Money used to buy other assets.

Answer: (A)

Capital goods are the tools, buildings, and equipment that businesses use to produce other goods and services. They’re not things people buy for immediate consumption, but durable items that help create more products over time. Machines, vehicles, and factories fit this idea because they enable production. Food and clothing are consumer goods meant for personal use right away. Public services like schools and hospitals are services provided to the public, not goods made to sell. Money used to buy assets is a financial resource, not a good that itself is produced. So the best answer is the one that describes items used in production to create other goods.