1. Identify whether each of the following is a flow variable or a stock variable
ID: 1205217 • Letter: 1
Question
1. Identify whether each of the following is a flow variable or a stock variable.
The total value of all of a company's outstanding bonds
The number of Canadian immigrants living in the United States
The amount a company borrows in any given year by issuing bonds
The value of a rare coin
The number of Canadians who emigrate to the United States each year
The amount by which a rare coin increases in value each year
Economic indicators
1. Data on recent interest rates can be a good indicator of whether the economy was recently in a recession. This kind of data is called a (leading,lagging,coincident) economic indicator.
2. Similarly, data on business investment can be a good indicator of whether the economy will likely be in a recession soon. This kind of data is called a (leading,lagging,coincident) economic indicator.
Explanation / Answer
A stock variable is a measure at a particular point of time while a flow variable is measured during a period.
(1)
(a) Total value of bonds - Stock variable (Since it is measured at a point of time)
(b) Number of immigrants - Stock variable (Since it is measured at a point of time)
(c) Borrowing in a year issuing bonds - Flow variable (Since it is measured as the amount borrowed during a period (year))
(d) Value of rare coin - Stock variable (Since it is measured at a point of time)
(e) Number of Canadians who immigrate - Flow variable (Since it is measured as the amount during a period (year))
(f) Amount by which rare coin increases - Flow variable (Since it is measured as the change during a period (year))
ECONOMIC INDICATORS
(1) Lagging indicator
The reference data is historical (occured in the past), so indicator is based on past data.
(2) Leading indicator
The indicator will signal about a future event (probable future recession), so this is a leading indicator.
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