Correct answer: C
Explanation
* Internally capital formation takes place when a country does not spend all its current income on consumption, but saves a part of it and uses it for investment to increase further production. This act of saving and investment is described as capital accumulation or capital formation.
* Capital formation refers to investments in physical and human capital, such as building new factories, improving infrastructure, and educating the workforce. Increased capital allows for greater production and innovation.