Which of the following is an example of a flow variable in economics?
A. Capital stock
B. National income
C. Money supply at a point in time
D. National wealth
Answer: Option B
Solution (By JKSSB Mock Tests)
National income is a flow variable as it is measured over a period of time. Wealth, capital stock and money supply at a point in time are stock variables.
Explanation:
The real exchange rate is defined as the nominal exchange rate multiplied by the ratio of foreign to domestic price levels (or the relative price of foreign to domestic goods).
Explanation:
The Lucas Critique argues that the parameters of traditional econometric models are not policy-invariant because economic agents change their behaviour when policy rules change.
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