Stocks and flows

The total number of machines available at the end of the year is measured at a particular point of time, namely year-end. It represents the capital stock existing at that moment. Investment or expenditure on machines during the year would be a flow, but the accumulated number available at year-end is a stock. Hence, option B is correct.

Depreciation recorded during one year is measured over a period of time, so it is a flow variable. It represents the reduction in the value of capital goods during that period. The machine itself or the capital stock is measured at a particular point in time and is therefore a stock variable. Thus, option C is correct.

A stock variable is measured at a particular point in time rather than over a time period. Therefore, the phrase “on a particular date” is the clearest indicator of a stock variable, such as wealth or foreign-exchange reserves on 31 March. The other phrases describe periods and usually indicate flow variables. Hence, option D is correct.

A flow variable is measured over a specified period of time. “Per month” refers to an amount measured throughout a month, such as monthly income, expenditure, or production. The other choices refer to balances, stocks, or assets measured at a particular point in time. Therefore, option A correctly identifies a flow variable.

The total machines present on 31 March are counted at one specific point in time. A quantity measured at a particular date is a stock variable. It represents the accumulated capital available at that moment, not the amount acquired or produced during a period. Capital expenditure and income are generally flows. Therefore, option C is correct.

A balance sheet presents assets, liabilities, and capital as they exist on a particular date. Since these quantities are measured at a point in time, they are stock variables. Income and expenditure are normally recorded over an accounting period and are flow variables, usually appearing in an income statement. Hence, option D is correct.

A profit and loss account records sales, income, expenses, and profit or loss for a specified accounting period. Amounts measured over a period are flow variables. Although the account may help explain changes in assets, its principal figures relate to transactions during the period, unlike balance-sheet figures measured on a date. Thus, option A is correct.

Exports made during one year are measured over the period of that year, so their value is a flow variable. They represent transactions occurring over time rather than an amount existing on one particular date. Foreign-exchange reserves on a date would be a stock variable. Therefore, option B is correct.

Foreign-exchange reserves held by the central bank on a specified date are measured at a particular point in time. They are an accumulated balance, so they are a stock variable. Exports and income are normally measured over a period and are flows. The wording “on a date” is the decisive clue. Hence, option C is correct.

A stock is measured at a particular point in time, but its value can change from one date to another. For example, a bank balance is a stock; deposits and withdrawals can increase or decrease it. Thus, being a stock does not mean being constant. Option D correctly states both parts of the concept.

Investment is a flow of expenditure on new capital goods such as machines, buildings, and equipment. Other things remaining the same, this addition increases the economy’s capital stock. Depreciation may reduce the stock, but it is a separate flow. Therefore, investment generally increases capital stock, making option A correct.

A bank balance is a stock measured at a particular point in time. Deposits and withdrawals are flows occurring over periods, and their cumulative effect changes the balance. This demonstrates that a stock can be built up or altered by many flows. Therefore, option B correctly explains the stock-flow relationship.

Rent paid during one month is measured over the period of a month, so it is a flow variable. Cash held today, goods at the year-end, and debt outstanding on a particular date are measured at specific points in time and are stocks. The time expression “during one month” makes option C the only correct answer.

Cash held today is measured at a specific point in time, so it is a stock variable. Income earned during a year, salary earned during a month, and output produced during a year are measured over periods and are therefore flows. The word “today” indicates a point-in-time balance. Hence, option D is correct.

Income is earned or received over a period, such as monthly wages or annual profit, and is therefore a flow variable. Wealth is the value of accumulated assets owned at a particular point in time and is therefore a stock variable. This difference is based on the time dimension of measurement. Option A is correct.

Capital refers to the stock of productive assets, such as machines, buildings, and equipment, available at a point in time. Investment is expenditure on acquiring or creating additional capital goods during a period, so it is a flow. Investment can therefore increase the capital stock, subject to depreciation. Option B is correct.

The value of wheat present in the warehouse on 30 June is measured at one specified date. Therefore, it is a stock variable representing inventory held at that point in time. Annual income and monthly output are measured over periods and are flows. The phrase “on 30 June” clearly signals a stock. Thus, option C is correct.

Wheat entering the warehouse during July represents an inflow occurring over a specified period. It is therefore a flow variable. The total quantity present on a particular date would be a stock, but the quantity entering during July measures movement over time. Hence, option D is the precise answer.

A company’s total assets on a specified date are measured at a particular point in time and represent accumulated holdings. They are therefore a stock variable. Sales, salary expenditure, and production are measured during periods and are flows. The words “on a specified date” provide the decisive clue. Thus, option A is correct.

A flow variable is measured over a period of time because it records an amount generated, earned, spent, or transacted during that interval. Total sales during one year are accumulated throughout the year, so they are a flow. In contrast, bank balance on a particular date, population today, and capital stock at year-end are stock variables because each is measured at a specific point in time. Thus, option B is correct.

Production stated for one year is measured over the period of that year, not at a single instant. It is therefore a flow variable. The stock of machines or the debt balance would be measured at a particular date. The time reference “for one year” makes production a flow in this question. Hence, option C is correct.

Natural resources available at a particular point in time, such as mineral reserves or forest area on a given date, are measured as an existing stock. A stock describes an accumulated quantity at that moment. Annual income and monthly expenditure are measured over periods and are flows. Therefore, option D correctly identifies the resource stock.

A flow variable is measured over a specified interval, such as income earned in a year, output produced in a month, or exports during a quarter. Therefore, the time period must be stated to give the flow a meaningful measure. A particular point in time is required for a stock, not a flow. Option A is correct.

A stock variable is measured at a definite point in time, such as bank deposits on 31 March, a firm’s machines today, or debt outstanding on a particular date. The date or time point establishes the position being measured. A full-year period instead describes a flow. Therefore, option B is correct.

Income is measured as earnings over a period, and investment is measured as expenditure on capital goods during a period. Thus, both are flow variables. Wealth, bank balance, capital stock, cash held today, and debt balance describe accumulated positions at a point in time and are stocks. Hence, option C is the only correct pair.