Distinguish between Consumption goods and Capital goods. Giving valid reasons, classify the following into stock and flow variables : (i) Population of India as on 31st March, 2021 (ii) Domestic Income of Indian Economy during the fiscal year 2020 – 21

Question

Accepted Answer

Distinguish between Consumption goods and Capital goods:

Consumption goods: Goods used for final consumption by households. They satisfy direct wants. Example: Food, clothing, electronics.

Capital goods: Goods used for further production. They help in producing other goods. Example: Machinery, equipment, factories.

Stock vs Flow variables:

(i) Population of India as on 31st March, 2021: Stock variable
- Measured at a particular point in time
- It is a snapshot of population on a specific date

(ii) Domestic Income: Flow variable
- Measured over a period of time
- It represents income generated during a year