Question

What is the primary difference between income and​ wealth? A. Income is earned by​ households; wealth is gained by inheritance. B. Income is a flow​ variable; wealth is a stock variable. C. Income reveals net​ worth; wealth is a stock variable. D. Income is the value of what a household owns minus its​ debt; wealth is a measure of net worth.

Answer 1

Answer: the correct ianswer is B. Income is a flow variable; wealth is a stock variable.

Explanation:

A stock is measured at one specific time, and represents a quantity existing at that point in time (say, December 31, 2004), which may have accumulated in the past. A flow variable is measured over an interval of time. Therefore, a flow would be measured per unit of time (say a year).