Question

Which of the following asset belongs to the flow concept?

A Number of one’s shirts Correct Answer Incorrect Answer
B Total wealth Correct Answer Incorrect Answer
C Monthly income Correct Answer Incorrect Answer
D Money supply Correct Answer Incorrect Answer

Solution

Incomeis aflow conceptbecause it is measured over a period of time (length of time). Circular/low ofincomerefers to continuous circularflowof moneyincome. Theconceptsof stock andfloware used in more in macro economics or in the theory ofincome, output and employment. Money is a stock variable, whereas the spending the money is aflowvariable. Wealth is stock,incomeisflow, saving by a person within a month isflow, while the total saving on a day is stock.

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