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Capital goods are assets with a useful life of more than one year that are used for the production of income.  Capital good and capital asset refer to the same type of asset -- the context determines which one is used.  When the term “capital good” is used, it is usually in the context of economic analysis of the level of capital goods purchased and used in the total economy. “Capital asset” is a term most often used in accounting and finance to refer to a company’s long-term assets.

In economics, a capital good is any type of asset that is used to produce other goods, or helps in performing services that the company sells to others.  This includes buildings, factories, automobiles, airplanes, trucks, furniture, computers, and machines used in manufacturing, just to name a few.  Often, the manufacturing process for a capital good is so extensive that it is produced by an amalgamation of various manufacturers. 

Economists and investors monitor the level of capital goods purchases. Companies are more likely to purchase capital goods if they forecast an increase in future demand for their products.  So if there is an increase in overall capital goods purchases, it could be a leading indicator that the economy is about to grow. 

Some of the best-known capital goods producers are Boeing, International Harvester, Mack Trucks and General Dynamics.

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