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Which of the following is a stock variable?

a. Income
b. Consumption
c. Investment
d. Wealth

User Reza Ameri
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1 Answer

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Final answer:

Wealth (d) is a stock variable, representing a measure at a specific moment in time, unlike flow variables such as income, consumption, and investment, which quantify over a period.

Step-by-step explanation:

Among the options provided, d. Wealth is a stock variable. Unlike flow variables, which quantify something over a period of time, such as income ( a country's total accumulated wealth), consumption (annual government spending), and investment (the average annual income of a country's citizens), a stock variable is a measure at a particular point in time. Wealth, which can be illustrated by a country's debt, encompasses assets such as property, investments, and savings, and reflects the cumulative result of past actions and financial decisions. It represents the total value of those assets at a given moment.

Indeed, wealth has significant implications on economic conditions and opportunities. For instance, wealth disparities can perpetuate economic inequalities across generations. Also, physical capital, a component of wealth, plays a crucial role in production and can lead to increased income over time, either through business profits, dividends from stocks, or interest earned on savings.

User Russell Seymour
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