Question

Which of the followings is correctly defining the economic term?

• A. All money is wealth but all wealth may not be money
• B. All types of wealth are capital but all capital are not necessarily wealth
• C. The law of supply does not hold good under constant technology and cost structures
• D. Huge mountains, rivers etc. that cross the boundaries of countries are considered as a national wealth

Hint:

To remember these relationships:
- Money is a subset of Wealth.
- Capital is a subset of Wealth used for production.
Therefore, all money is wealth, and all capital is wealth.

Answer 1

The Correct Option is A

Step 1: Understanding the Concept:
In economics, it is important to understand the precise definitions and relationships of key terms such as money, wealth, capital, and supply.

Step 2: Detailed Explanation:
Let us analyze each statement to determine its accuracy:
- Statement A is correct: Wealth includes all goods, assets, and resources that have value, utility, and can be exchanged.
Money is a specialized form of wealth that serves as a medium of exchange, a unit of account, and a store of value.
Therefore, all money is a form of wealth, but not all wealth is money.
Wealth also includes non-monetary assets like land, livestock, buildings, and grain stores.
- Statement B is incorrect: Capital is defined as the subset of wealth used specifically for further production.
Therefore, all capital is wealth, but not all wealth is capital.
For example, residential houses or personal vehicles are wealth but are not classified as capital.
- Statement C is incorrect: The law of supply states that other things being equal, the quantity supplied increases as price rises.
This relationship holds true under constant technology and cost structures.
- Statement D is incorrect: Natural features like international rivers and trans-boundary mountains are classified as global or natural resources rather than exclusive national wealth.

Step 3: Final Answer:
The correct economic definition is represented by option (A).