A machine was installed in a factory in 2020 and is still working in 2024. In which year(s) is it a part of the flow of new machines added to the capital stock?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Only in 2020
The capital stock is a stock; machines added to it in a year are a flow. A machine counts in that flow only in the year it is installed, here 2020. In later years it is only part of the stock.
Option (1) Only in 2020 — Correct. It joined the capital stock in 2020, the year it was installed.
Option (2) In every year from 2020 to 2024 — Incorrect. From 2021 onwards it is part of the stock, not the flow of new machines.
Option (3) Only in 2024 — Incorrect. In 2024 it is an old machine; it is not new to the capital stock.
Option (4) In none of these years — Incorrect. It was part of the flow, in the year it was installed.
NCERT (2026-27): “2.1 Some Basic Concepts of Macroeconomics … Stocks are defined at a particular point of time. However we can measure a change in stock over a specific period of time like how many machines were added this year. Such changes in stocks are thus flows, which can be measured over specific time periods. A particular machine can be part of the capital stock for many years (unless it wears out); but that machine can be part of the flow of new machines added to the capital stock only for a single year when it was initially installed. …” |