Question

1. Flow and stock variables

Identify whether each of the following is a flow variable or a stock variable:

The amount by which a Picasso painting increases in value each year
The number of bags of rice a grocery store sells in a day
The federal government budget deficit
The number of bags of rice on the shelf at a grocery store
The value of a Picasso painting
The federal government debt

Answer 1

Stock Variables are values at any particular point of time while Flow Variables are values during a period of time.

In line with the above definition, the following are classified.

The amount by which a Picasso painting increases in value each year: Increase over a period of time. So FLOW Variable
The number of bags of rice a grocery store sells in a day. Transaction over a period of time. So FLOW Variable
The federal government budget deficit. The total deficit over a period of a year or some time. So FLOW Variable
The number of bags of rice on the shelf at a grocery store. The amount at one point of time. So STACK VARIABLE
The value of a Picasso painting. The value at one point of time. So STACK VARIABLE
The federal government debt. The debt at one point of time. So STACK VARIABLE

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