Which of the following are correct statements related to stock and fl…

Which of the following are correct statements related to stock and flow?

A. Flows are defined over on 1^st January

B. Flows are defined over a period of time

C. Flows and stocks are defined as a mutual understanding

D. Stocks are defined from January to December

E. Stocks are defined at a particular point of time

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → B and E only

A stock is measured at a point of time, like the machines a factory has on one day. A flow is measured over a period of time, like the output of a year.

(A) Flows are defined over on 1^st January — False. A single date is a point of time, which is how a stock is measured.

(B) Flows are defined over a period of time — True. Income or output means little unless we say per month or per year.

(C) Flows and stocks are defined as a mutual understanding — False. They are not fixed by agreement. They are told apart by time: a period for a flow, a point for a stock.

(D) Stocks are defined from January to December — False. January to December is a period of time, which suits a flow, not a stock.

(E) Stocks are defined at a particular point of time — True. The buildings or machines of a factory are there at a given moment. A change in a stock over a year is a flow.

NCERT (2026-27): “2.1 Some Basic Concepts of Macroeconomics …Thus income, or output, or profits are concepts that make sense only when a time period is specified. These are called flows because they occur in a period of time. Therefore we need to delineate a time period to get a quantitative measure of these. Since a lot of accounting is done annually in an economy, many of these are expressed annually like annual profits or production. Flows are defined over a period of time.

In contrast, capital goods or consumer durables once produced do not wear out or get consumed in a delineated time period. In fact capital goods continue to serve us through different cycles of production. The buildings or machines in a factory are there irrespective of the specific time period. There can be addition to, or deduction from, these if a new machine is added or a machine falls in disuse and is not replaced. These are called stocks. Stocks are defined at a particular point of time.…”