Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: National Income Accounting

Question:

Goods like food and clothing, and services like recreation that are consumed when purchased by their ultimate consumers are called consumption goods or consumer goods. This also includes services which are consumed but for convenience we may refer to them are as consumer goods.

There are other goods that are of durable character which are used in the production process. These are tools, implements and machines. While they make production of other commodities feasible, they themselves don't get transformed in the production process. They are also final goods yet they are not final goods to be ultimately consumed. They are the crucial backbone of any production process, in aiding and enabling the production to take place. These goods form a  part of capital, one of the crucial factors of production in which a productive enterprise has invested, and they continue to enable the production process to go on for continuous cycles of production. There are capital goods and they gradually undergo wear and tear, and thus are repaired or gradually replaced over time. The stock of capital that an economy possesses is thus preserved, maintained and renewed partially or wholly overtime.

Identify the Stock variables.

A. Income

B. Output

C. Capital

D. Profits

E. Money Supply

Choose the correct answer from the options given below :

Options:

B only

A and B only

A, B and D only

C and E only

Correct Answer:

C and E only

Explanation:

The correct answer is option (4) : C and E only

"Stock" and "flow" are concepts used in economics and finance to describe different aspects of quantities or values.

A stock refers to a quantity measured at a specific point in time. It represents the accumulated value of a variable up to a certain point. Example: The total amount of money in a bank account, the current inventory of goods in a store, or the total outstanding debt of a country are examples of stocks. These values are measured at a particular moment.

A flow refers to a quantity measured over a period of time. It represents the rate at which a variable changes.

 

  • Capital (C) is a stock variable because it represents the accumulated value of physical assets at a specific point in time.
  • Money Supply (E) is a stock variable because it represents the total amount of money available in an economy at a particular moment.
  • The other options—Income (A), Output (B), and Profits (D)—are flow variables as they are measured over a period of time.