CSEET · Economic and Business Environment · National Income Accounting and Related Concepts
In national income accounting, which of the following is treated as a 'flow' variable rather than a 'stock' variable?
GDP for a financial year is a flow variable because it measures output produced over a period of time. Money supply, forex reserves and capital stock are measured at a particular date, which makes them stock variables.
- AGross Domestic Product of India for a financial yearCorrect
- BTotal money supply with the public on 31 March
- CForeign exchange reserves held by the RBI on a given date
- DCapital stock of machinery in the economy at the year end
Explanation
A flow is measured over a period of time, such as a year. GDP records the value of output produced during a financial year, so it is a flow. Money supply, forex reserves and capital stock are measured at a point in time, so they are stocks.
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