Question

Q. Which of the following economic variables are known as “Stock variables”?

Select the correct answer using the code given below:

• A.
  1, 2 and 5 only
• B.
  2, 3 and 4 only
• C.
  1, 4 and 5 only
• D.
  1, 2, 4 and 5 only

Answer 1

The correct option is C

1, 4 and 5 only
Explanation:

Stock and Flow variables are the economic terms that are used to describe the various kinds of quantities depending on the time period for measurement.

Stock variables are defined at a particular or fixed point of time. For example, buildings, machines, raw material, semi finished goods, foreign debts, loans, inventory etc. These are defined for a particular time in a year.

Flow variables are defined over a period of time and can’t be defined for a particular point of time. For example, income for a year, profit or loss for a month, replacement of machinery in a year etc.

It is to be noted here that the stocks will become flows when we measure a change in stock over a specific period of time. For example, machines in a factory are stock but the machines added in a year will become flow.