1 Flow and stock variables Aa Aa Identify whether each of th

1. Flow and stock variables Aa Aa Identify whether each of the following is a flow variable or a stock variable: Flow Stock The amount a company borrows in any given year by issuing bonds O The amount by which a rare coin increases in value each year The value of a rare coin The total value of all of a company\'s outstanding bonds The number of bags of rice on the shelf at a grocery store The number of bags of rice a grocery store sells in a day

Solution

1. What is the Stock and Flow Variables?

            A stock variable is measured at one specific time, and represents a quantity existing at that point in time, which may have accumulated in the past.

            A flow variable is measured over an interval of time. Therefore a flow would be measured per unit of time. Flow is roughly analogous to rate or speed in this sense.

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

            The amount a company borrows in any given year by issuing bonds- Flow Variable

            The amount by which a race coin increases in value each year       - Flow Variable

            The value of a rare coin                                                                     - Stock Variable

            The total value of all of a company’s outstanding bonds                   - Stock Variable

            The number of bags of rice on the shelf at a grocery store             - Stock Variable

            The number of bags of rice a grocery store sells in a day                 - Flow Variable

3. Economic Indicators:

            Economic indicators allow analysis of economic performance and predictions of future performance. One application of economic indicators is the study of business cycles. Economic indicators include various indices, earnings reports, and economic summaries.

            They are of three main types of indicators in an Economy:

            Data on personal income can be a good indicator of whether the economy is currently in a recession. This data is called a Coincident economic indicator.

            Similarly, data on how long people have been unemployed can be a good indicator of whether the economy was recently in a recession. This king of data is called a Lagging economic indicator.

5. Macroecomics theory and Policy:

            Keynesian economics theory basically states that governments can influence macroeconomic productivity levels by increasing or decreasing tax levels and public spending.

Q. Which of the following is an example of Keynesian fiscal Policy?

The president signs a $787 billion stimulus package passed in 2009

In 2008, the Federal Deposit Insurance Corporation (FDIC) temporarily increases its guarantee on deposits from $100,000 to $250,000

The Federal Reserve lowers the federal funds rate target to near zero after the 2008-2009 financial crises.