The statement 'the average salary of a person is Rs 10,000' is incomplete because salary, like income, output and profits, makes sense only when a time period is given. Such variables are called:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Flows
Salary, income, output and profits make sense only for a stated period of time. Such variables are flows.
NCERT (2026-27): “2.1 Some Basic Concepts of Macroeconomics … Often we hear statements like the average salary of someone is Rs 10,000 or the output of the steel industry is so many tonnes or so many rupees in value. But these are incomplete statements because it is not clear whether the income which is being referred to is yearly or monthly or daily income and surely that makes a huge difference. Sometimes, when the context is familiar, we assume that the time period is known and therefore do not mention it. But inherent in all such statements is a definite period of time. Otherwise such statements are meaningless. 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.” |