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Consider the following statements:
Flows are defined at a particular point of time.
Stocks are defined over a period of time.
Which of the statements given above is/are Correct?
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Correct answer is option 'D'. Can you explain this answer?
Most Upvoted Answer
Consider the following statements: Flows are defined at a particu...
Option (d) is the correct answer. Concepts like income, output or profits are concepts that make sense only when a period of time is specified. You only earn profit or income over a period of time. These are called flows because they occur over a period of time.
Thus, flows are defined over a period of time. Therefore statement 1 is incorrect. In contrast, capital goods or consumer durables once produced do not wear out or get consumed in a delineated time period. These are called Stocks. Stocks are thus defined at a particular point of time. However, changes in stock over a period of time are called flows. Thus statement 2 is incorrect.
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Consider the following statements: Flows are defined at a particu...
Flows and Stocks:
Flows and stocks are two key concepts in economics that help in understanding the movement and accumulation of economic resources. Let's analyze the given statements to determine their accuracy.
Flows:
- Flows represent the movement of resources, such as money, goods, or services, over a specific point in time.
- Examples of flows include income earned in a particular month, sales made in a day, or expenses incurred during a week.
- Flows are instantaneous and are measured at a specific moment or period.
Stocks:
- Stocks, on the other hand, represent the accumulation of resources over a period of time.
- Examples of stocks include the total savings in a bank account, the inventory of a company at the end of a quarter, or the total population of a country.
- Stocks are measured at a specific point in time and reflect the existing quantity or value of a resource.
Correctness of the Statements:
- The first statement, "Flows are defined at a particular point of time," is incorrect. Flows are not defined at a specific point but rather over a period of time.
- The second statement, "Stocks are defined over a period of time," is also incorrect. Stocks represent the quantity of a resource at a specific point in time, not over a period.
Conclusion:
Therefore, both statements are inaccurate as they misrepresent the definitions of flows and stocks in economics. Flows are measured over a period, while stocks are measured at a specific point in time.
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Consider the following statements: Flows are defined at a particular point of time. Stocks are defined over a period of time. Which of the statements given above is/are Correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'D'. Can you explain this answer?
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