In a third step, the firm now uses the money to hire some formerly unemployed worker from the household sector in order to produce some capital good (. build a factory building). Hiring the worker and paying him 100 pesos by bank transfer means a transfer of the deposit from the firm’s account to the household’s account in the bank. 12 At the same time, the firm gets the capital good newly produced while the household’s net wealth increases by the amount of wages paid (accounting record 3). Thus, the capital stock has been increased just by employing formerly underutilized.
