The correct answer is Option (2) → Capital
A stock variable is measured at a specific point in time. It shows the quantity of something existing at that moment. A flow variable, on the other hand, is measured over a period of time and reflects a rate of change.
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Income –Income is measured over a period (e.g., weekly income, annual income). Therefore, it is a flow variable.
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Capital – Capital refers to the total accumulated stock of physical assets (like machinery, buildings, infrastructure) at a particular moment. We can measure the capital stock of a country or a firm at a specific date. Therefore, it is a stock variable.
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Production of Bricks – Production is a continuous process that occurs over time (e.g., x bricks produced per day, per month, or per year). Therefore, it is a flow variable.
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Capital Formation – Capital formation (also known as investment) refers to the addition to the capital stock over a period of time (e.g., how much new capital was added this year). Therefore, it is a flow variable.
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