Match the LIST-I with LIST-II
| LIST-I | LIST-II | ||
| A. | Final goods | I. | Variables defined over a period of time |
| B. | Flow | II. | Tools, machinery used in the production of goods and services |
| C. | Stock | III. | Goods are available for consumption |
| D. | Capital goods | IV. | Variables defined at a point of time |
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → A-III, B-I, C-IV, D-II
National income accounting sorts goods by their use and variables by how they are measured. A good bought by its final user is a final good, either for consumption or, if it is durable and used in production, a capital good. A variable measured over a period is a flow; one measured at a moment is a stock.
A. Final goods — this matches (III) Goods are available for consumption. A final good is one that has passed out of the active flow of production and will not be transformed further by any producer. Food, clothing and services such as recreation, bought by their ultimate consumers, are the consumption goods among them.
B. Flow — this matches (I) Variables defined over a period of time. Income, output and profits make sense only when a time period is stated, such as per month or per year. Such variables are flows: they are defined over a period of time.
C. Stock — this matches (IV) Variables defined at a point of time. The machines and buildings in a factory are there at any given moment, whatever period one looks at. Such variables are stocks: they are defined at a particular point of time.
D. Capital goods — this matches (II) Tools, machinery used in the production of goods and services. Capital goods are durable final goods, such as tools, implements and machines, that are used in production over many cycles and gradually wear out.
NCERT (2025-26): “2.1 Some Basic Concepts of Macroeconomics … Of the final goods, we can distinguish between consumption goods and capital goods. 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.… …Then 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. Unlike the final goods that we have considered above, 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. These are capital goods and they gradually undergo wear and tear, and thus are repaired or gradually replaced over time.… …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.…” |