In Terms of Budget Deficits, Which Is a Flow Variable

question 23

Multiple Choice

In terms of budget deficits, which is a flow variable and which is a stock variable?  

• A) A budget deficit is a flow variable; debt is a stock variable. 
• B) A budget deficit is a stock variable; debt is a flow variable. 
• C) A budget deficit and the debt are both stock variables. 
• D) A budget deficit and the debt are both flow variables.

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Definitions:

Weighted Average Cost Of Capital

The average rate of return a company is expected to pay its security holders, weighted by the proportion of each finance source in the company's structure.

Economic Value Added

A measure of a company's financial performance calculated by subtracting its cost of capital from its operating profit.

Operating Income

Earnings before interest and taxes (EBIT), representing the profit from core business operations excluding non-operating income and expenses.

Economic Value Added

A measure of a company's financial performance based on the residual wealth calculated by deducting cost of capital from its operating profit.