#capital #economiccapital #interestrates
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There are four factors of production, land, labor, capital, and entrepreneurship. Capital are the tools that drive the production process. You can have intellectual capital or physical capital. Interest rates govern the expansion and contraction of the economy because of its direct and indirect influence on capital. In this video, I use a garden hoe as an example for a capital good I purchase on a credit card, which has an interest rate, which I have to pay. Extrapolate that out and to the macroeconomy and than you understand the relationship between capital expenditures and interest.
