Question

Explain flow variables.

What do you mean by the following term?

Flow variables

Answer 1

Flow variables are economic quantities that are measured over a specific period of time. They represent the rate of change or activity in the economy during that period.

• Always linked to a time frame (e.g., per month, per year).
• Indicate movement like income earned, goods produced, or money spent.
• Help in analyzing economic performance over time.

Examples:

• National income in a year
• Government expenditure per quarter
• Exports and imports during a month
• Savings or investment in a financial year