Question 1

The purchase of new machines by a company during the year is what type of variable?

Accepted Answer

Flow The purchase of new machines during a year is measured over a period, so it is a flow variable. In national accounting, such expenditure is part of investment during that year. The machines owned by the company at a particular date would be capital stock, but the purchase occurring throughout the year is a flow.

Question 2

What is the correct difference between the amount in a bank account on 30 June and the amount deposited during June?

Accepted Answer

The first is a stock and the second is a flow The bank balance on 30 June is measured at a specific date, so it is a stock. Deposits made during June are added over the course of a month, so they are a flow. The same monetary item can therefore be classified differently depending on whether it is a balance at a date or an amount recorded during a period.

Question 3

Which option contains two examples linked with a period of time?

Accepted Answer

Annual income and monthly expenditure Annual income and monthly expenditure are both measured over defined periods: a year and a month respectively. Therefore, both are flow variables. Bank balances, wealth, capital stock, and inventory generally refer to amounts existing at a particular time and are therefore stocks when no period activity is specified.

Question 4

Which option contains two examples linked with a point of time?

Accepted Answer

Total population and bank balance Total population and a bank balance represent quantities existing at a particular point in time, so both are stock variables when stated as totals or balances. The other options describe activities occurring over days, weeks, months, or years, such as output, sales, saving, expenditure, and tax collection; these are flows.

Question 5

If a shop's inventory on 1 April is ten lakh rupees, what type of variable is it?

Accepted Answer

Stock The shop's inventory valued at ten lakh rupees on 1 April is a stock variable because it is measured at a particular date. It shows the quantity of goods held by the shop at that instant, rather than the goods purchased or sold during a period. Purchases and sales over a month or year would be flow variables. Hence, option B is correct.

Question 6

If the same shop's sales during April are two lakh rupees, what type of variable are they?

Accepted Answer

Flow Sales during April are measured over the interval of one month, so they are a flow variable. Sales record an economic activity taking place throughout a period. By contrast, the shop's inventory on a particular date would be a stock because it records the goods available at one point in time.

Question 7

In which example is the first variable a stock and the second a flow?

Accepted Answer

Total wealth and monthly rent Total wealth is an accumulated value measured at a point in time, so it is a stock. Monthly rent is an amount paid over a month, so it is a flow. Option C reverses the order, while options A and D place the flow first; therefore, only option B satisfies the required stock-then-flow sequence.

Question 8

In which example is the first variable a flow and the second a stock?

Accepted Answer

Monthly income and cash balance Monthly income is measured over the duration of a month, so it is a flow. A cash balance is the amount held at a particular point in time, so it is a stock. The other options either begin with a stock or place a period-based variable second, and therefore do not show the required flow-then-stock order.

Question 9

What is the correct classification of a household's monthly income and its deposits at the end of the month?

Accepted Answer

Monthly income is a flow and the deposit balance is a stock Monthly income is earned throughout a month, so it is a flow variable. The deposit balance at the end of the month is measured on one specified date, so it is a stock variable. Although deposits may result from earlier flows of saving, the balance itself is a stock at the date of measurement.

Question 10

Which option contains only stock variables?

Accepted Answer

Wealth, population, money supply Wealth, population, and money supply are stock variables because each represents a quantity measured at a particular point of time. Wealth is the accumulated value of assets, population is counted on a date, and money supply is the total money available at a given time. Saving, income, output, sales, investment, taxes, and imports are generally measured over a period and are therefore flows.

Question 11

What is the main difference between money supply and flow of money during a year?

Accepted Answer

Money supply is total money at a point and flow is transactions over a period Money supply is a stock because it measures the total quantity of money existing in the economy at a particular point of time. In contrast, the flow of money refers to payments or transactions taking place during a specified period, such as a month or year. Thus, option B correctly separates a balance from movement.

Question 12

What is the correct classification of cash in a student's pocket today and cash spent during the week?

Accepted Answer

Cash today is a stock and weekly spending is a flow A stock is measured at a particular point in time, whereas a flow is measured over a period of time. The cash present in the student’s pocket today is a balance at one date, so it is a stock. Cash spent during the week is recorded over seven days, so it is expenditure during a period and therefore a flow. The time reference determines the classification.

Question 13

Which of the following statements is incorrect?

Accepted Answer

National wealth is a flow National wealth is a stock, not a flow, because it represents the accumulated value of assets owned by a nation at a particular point of time. National income is earned and measured over a period, so it is a flow. Therefore, the statement that national wealth is a flow is incorrect.

Question 14

If capital stock is ten crore rupees and investment during the year is two crore rupees, what is the nature of both variables?

Accepted Answer

Capital stock is a stock and investment is a flow Capital stock represents the value of capital assets available at a particular point in time, so it is a stock. Investment represents the addition to the capital stock made during a specified period, here one year, so it is a flow. The figures of ten crore and two crore do not change this conceptual classification; the relevant distinction is the time dimension.

Question 15

Which option correctly distinguishes saving as a flow from saving as a stock?

Accepted Answer

Saving during the year is a flow and accumulated saving at year-end is a stock Saving made during a year is measured over the entire year, so it is a flow. Accumulated saving at the end of the year is the balance built up by past saving and measured on a particular date, so it is a stock. In general, a flow can change a stock: regular saving adds to accumulated wealth or financial balances over time.

Question 16

Which option shows the correct relation between income and wealth?

Accepted Answer

Income is flow and wealth is stock Income is a flow because it is earned or received over a period such as a month or year. Wealth is a stock because it represents the accumulated value of assets and liabilities at a particular point of time. Thus, income adds to wealth over time, but the two concepts are not identical.

Question 17

How will opening inventory balance and change in inventory during the year be classified?

Accepted Answer

Opening balance is stock and change is flow The opening inventory balance is the quantity of goods existing at the beginning of a specified date, so it is a stock. The change in inventory records an increase or decrease occurring throughout the year, so it is a flow. A balance is a stock, while its change over time is a flow.

Question 18

The increase in a country's population during a year is what type of variable?

Accepted Answer

Flow A flow is measured over a period of time. The increase in population during a year records the change that occurs throughout that year, so it is a flow. By contrast, the total population on a particular date is a stock because it is measured at one point in time. Thus, population growth during the year is correctly classified as a flow.

Question 19

The total population of a country on the census date is what type of variable?

Accepted Answer

Stock A stock is measured at a specific point in time. The census records the country’s total population on a particular date, so that population figure is a stock. It does not measure births, deaths, or population change over an interval. Those events or changes would be flows, whereas the total number existing on the census date is the stock.

Question 20

What is the correct classification of the number of births in a year and the total population on a date?

Accepted Answer

Births are a flow and population is a stock The number of births in a year is counted over an interval from the beginning to the end of the year, so it is a flow. Total population on a specified date is measured at one point in time, so it is a stock. The same population can rise through flows such as births and immigration and fall through flows such as deaths and emigration.

Question 21

Which option correctly classifies production and capital stock?

Accepted Answer

Production is flow and capital stock is stock Production is measured as the quantity produced over a period such as a day, month, or year, so it is a flow. Capital stock is the value or quantity of productive assets available at a particular point of time, so it is a stock. Capital may generate production flows over time.

Question 22

How will a household's house and the annual rental value of that house be classified?

Accepted Answer

House is stock and annual rent is flow A house is an asset whose value is measured at a particular point of time, so it is a stock. Annual rent represents the income or service value generated by the house over a year, so it is a flow. The asset and the return earned from using it have different time dimensions.

Question 23

The fall in the value of machines due to wear and tear during a year is what type of variable?

Accepted Answer

Flow Depreciation caused by wear and tear is measured over a period, such as a year, because it records the reduction in the value of machines during that interval. Therefore, depreciation is a flow. The remaining value of the machines on a particular date would be a capital stock. A change in a stock over time is normally treated as a flow.

Question 24

Written down value of machines at the end of the year is what type of variable?

Accepted Answer

Stock Written-down value at the end of the year is the book value of machines existing on a specified date. Since it is measured at that point of time, it is a stock variable. Annual sales and monthly income are flows because they are measured over periods, not as balances on one date.

Question 25

If per day is written with a variable, what will it generally be treated as?

Accepted Answer

Flow The phrase “per day” indicates a rate or quantity measured over a time period. Such a variable is generally treated as a flow, because it records an amount occurring during each day. A stock, in contrast, is measured at a point of time, such as cash held on a particular date.

Stocks and flows

Practice questions

01 The purchase of new machines by a company during the year is what type of variable?

02 What is the correct difference between the amount in a bank account on 30 June and the amount deposited during June?

03 Which option contains two examples linked with a period of time?

04 Which option contains two examples linked with a point of time?

05 If a shop's inventory on 1 April is ten lakh rupees, what type of variable is it?

06 If the same shop's sales during April are two lakh rupees, what type of variable are they?

07 In which example is the first variable a stock and the second a flow?

08 In which example is the first variable a flow and the second a stock?

09 What is the correct classification of a household's monthly income and its deposits at the end of the month?

10 Which option contains only stock variables?

11 What is the main difference between money supply and flow of money during a year?

12 What is the correct classification of cash in a student's pocket today and cash spent during the week?

13 Which of the following statements is incorrect?

14 If capital stock is ten crore rupees and investment during the year is two crore rupees, what is the nature of both variables?

15 Which option correctly distinguishes saving as a flow from saving as a stock?

16 Which option shows the correct relation between income and wealth?

17 How will opening inventory balance and change in inventory during the year be classified?

18 The increase in a country's population during a year is what type of variable?

19 The total population of a country on the census date is what type of variable?

20 What is the correct classification of the number of births in a year and the total population on a date?

21 Which option correctly classifies production and capital stock?

22 How will a household's house and the annual rental value of that house be classified?

23 The fall in the value of machines due to wear and tear during a year is what type of variable?

24 Written down value of machines at the end of the year is what type of variable?

25 If per day is written with a variable, what will it generally be treated as?

Add Muft Shiksha to your Home Screen