Question

Inventory is a .......... concept whereas the change in inventory is a .......... concept.

• A. stock, flow
• B. flow, stock
• C. stock, stock
• D. flow, flow

Hint:

Stock = measured at a point in time; flow = measured over a period.

Answer 1

The Correct Option is A

Step 1: Understanding the Question:
In national-income accounting, a stock is measured at a point in time; a flow is measured over a period of time.

Step 2: Why option A is correct:
Inventory (the stock of unsold goods a firm holds) is measured on a particular date, e.g. 31 March — that makes it a stock. The change in inventory over the accounting year is measured over a period, e.g. April to March — that makes it a flow.

Step 3: Why option B is wrong:
This reverses the logic: inventory itself is not measured over a period, and change in inventory is not measured at a single instant.

Step 4: Why option C is wrong:
Calling both concepts "stock" ignores that change is inherently a period-based (flow) measure.

Step 5: Why option D is wrong:
Calling both "flow" ignores that the inventory level itself is a point-in-time (stock) measure.

Final Answer:
Inventory is a stock, change in inventory is a flow.