In general, deficit is considered as a ________ concept.
Show answer & explanation
Correct answer: B
Explanation
The correct answer is option 2 i.e. Flow.
A deficit refers to the excess of expenditure over income during a specific period, usually a financial year. Because it measures the difference between inflows and outflows over time, it is a flow concept, not a stock. For example, a government’s fiscal deficit indicates how much more it has spent compared to its revenue within that year. Unlike stock concepts like wealth or debt—which are measured at a particular point in time—deficits accumulate and affect the overall financial health by increasing liabilities or reducing savings. Understanding deficit as a flow is crucial in economic and budgetary analysis.