Answer to Question #131485 in Macroeconomics for max

Question

Which of the following represents stock variables? (2)
(a) Wealth, saving and unemployment;
(b) Gold reserves held by the South African Reserve Bank, and investment;
(c) Income, profit and investment;
(d) Wealth, assets and liabilities

Answer 1

Answer: (d)

Wealth, assets and liabilities.

Explanation.

Two main variables important in economics are stock variables and flow variables. Stock variables are variables that describe the state of the economy at a specific point in time. However, flow variables are measured with reference to a time period, that is, they have a time dimension. As a result, stock variables are accumulated or depleted over time by movements in flow variables.

Stock variables include wealth, unemployment, government debt, human capital, capital, financial assets, physical assets, liabilities, quantity of money supply, quantity of inventories, population, and more. All these quantities are measurable at a specific point in time. On the other hand, flow variables include savings, investments, income, profits, interest, depreciation, exports, imports, changes in money supply, changes in inventories, GDP and more. These variables pertains to a period of time and are measurable over a time period.