(a) Roads constructed by the government are ______.
Answer: Capital formation
Roads are long-lasting public assets.
They help people and goods move from one place to another.
They support future economic activities.
Remember: Building roads adds to a country’s capital assets.
(b) Purchase of a tractor by a farmer is a part of ______.
Answer: Capital formation
A farmer buys a tractor to help with farming.
The tractor is used to produce crops.
It is a durable asset that helps increase future production.
Remember: A tractor used for farming is capital.
(c) A new house purchased by an individual is ______.
Answer: Capital formation
A newly constructed house is a long-lasting asset.
It provides housing services over many years.
Therefore, a new house adds to the country’s capital assets.
Remember: A newly built house is a capital asset.
(d) A doctor seeing a patient is ______.
Answer: Production
A doctor provides a medical service.
This service helps people maintain or improve their health.
Providing services is also a form of production.
Remember: Providing medical care is production.
(e) A student studying in a school is ______.
Answer: Consumption
A student receives and uses educational services.
The student gains knowledge and skills.
Using a service to satisfy a need is consumption.
Remember: A student receiving education is consuming an educational service.
Quick Revision Table
| Activity | Correct Answer |
|---|---|
| (a) Government constructs roads | Capital formation |
| (b) Farmer purchases a tractor | Capital formation |
| (c) An individual purchases a new house | Capital formation |
| (d) Doctor sees a patient | Production |
| (e) Student studies in school | Consumption |
Exam tip: Remember that capital formation adds to capital assets, production creates goods and services, and consumption mervices.