​Which of the following statements related to macroeconomics is correct?

A) Stock is static in nature.
B) Flow is dynamic in nature.

Correct option is B

The correct answer is: (b) Both A and B is true

Explanation:

• Stock refers to a quantity measured at a particular point in time. It is static as it represents the accumulation of past values and does not change unless new additions or subtractions are made. For example, the total national wealth or the stock of capital at a specific point is considered a stock.

• Flow refers to a quantity measured over a period of time. It is dynamic because it changes continuously over time. For example, income, expenditure, or production during a particular period is considered a flow.

Information Booster:
• Stock variables are measured at a point in time and include things like national wealth, capital stock, and money supply.
• Flow variables are measured over a period and include items like GDP, income, and investment.
• Stock and flow concepts are fundamental in macroeconomics for analyzing economic conditions and policies.
• Flow concepts are important for economic analysis, especially in understanding growth and changes in the economy.
• Understanding the difference between stock and flow helps in analyzing different aspects of the economy such as saving, investment, and economic growth.

Additional Information:
• Stock and flow are related. For example, the amount of investment (flow) determines the capital stock (stock) in the economy.
• Flow variables like interest rates and inflation rates impact stock variables like wealth or capital over time.