Capital

Capital is the third factor, and the chapter's definition has two halves.

Capital is money (monetary resources) and durable assets (things that last): machinery, tools, equipment, vehicles, vending carts, computers, shops, factories, office buildings.

So capital is "money plus human-made resources that are used to produce goods and services". In economics, any asset, physical or financial, used to produce goods and services counts.

Notice the word 'human-made'. That is what separates capital from land: land is given by Nature; capital was made by someone.

Ratna's story shows where capital comes from for a small business. Personal savings, family and friends are usually the first source.

But her money was not enough, so she took a bank loan to cover the gap, repaying part of the loan along with interest over time. Interest is what a borrower pays a lender for the use of their money for a period. (Borrow ₹100 at 5% a year for 2 years, and you pay back ₹110.)

Big companies need far more, so they raise money from the general public through the stock market: a special market where shares are bought and sold.

They do this by offering the public a share of the profits, called a dividend. So a loan and a share are two different deals: a loan promises interest whatever happens; a share promises a part of the profits, if there are any.