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CA Foundation · Business Economics · Determination of National Income

Which of the following is treated as a stock variable rather than a flow variable in national income analysis?

Wealth held by households at the end of the year is a stock variable because it is measured at a single point in time. National income, investment expenditure and wages paid in a month are flows, since each is measured over a period of time.

  1. AWealth held by households at the end of the yearCorrect
  2. BNational income during a year
  3. CInvestment expenditure during a year
  4. DWages paid in a month

Explanation

A stock is measured at a point in time, such as wealth or capital stock on 31 March. National income, investment and wages paid are quantities measured over a period, so they are flows. Hence only wealth at year end is a stock.

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