Final answer:
Capital or capital goods is the factor of production that includes machinery, tools, and equipment used to create other goods and services.
Step-by-step explanation:
The factor of production that refers to the goods and services used to create other goods and services is known as capital, or capital goods. These are items such as machinery, tools, and equipment that are necessary for production. Capital can be seen as both the outcome and the facilitator of the production process. For example, a factory machine is a form of capital because it is produced as a good for the factory and is used in the production of other goods. Capital goods differ from consumer goods, which are produced for personal use and consumption.