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Classify each of the following as either a stock or a flow.

a. Myung Park earns \(850per week.

b. Time Warner purchases \)100million in new telecommunications equipment this month.

c. Sally Schmidt has \(1,000 in a savings account at a credit union.

d.XYZ, Inc., produces 200units of output per week.

e. Giorgio Giannelli owns three private jets.

f. Apple's production declines by 750digital devices per month.

g. Russia owes \)25 billion to the International Monetary Fund.

Short Answer

Expert verified

Solution for all the followings are classified as a stock or a flow.

Step by step solution

01

(Part a)

The Myung Park's flow rate is $850per week. Since income flows from households to the firm during the week, and the flow is measured per unit of time.

02

(Part b)

The purchase of computer equipment by Time Warner of $100million is a flow of money. Because income flows from households to businesses and is measured according to a unit of time such as a month.

03

Step 3:  (Part c)

The amount of money $1,000in Sally Schmidt's savings account is indicative of the stock market. Because individuals save their income, there is no money going back and forth between the businesses and households.

04

 (Part d)

The output of 200units produced byXYZper week indicates a flow. The flow of goods between businesses and households takes place over time, and output is measured in terms of units like weeks.

05

 (Part e)

Giorgio Giannelli owns three private planes. This shows a stock. All types of physical property are included in stock.

06

 (Part f)

The General Motors production decline by 750autos per month shows a trend, as production is in process but with a decrease in the output. This is measured in terms of units of time, like a month.

07

 (Part g)

If Russia owes $25billions to the International Monetary Fund(IMF), this indicates a reserve. Unless there is payment, there is no flow of money.

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