The National Accounting framework says that total spending is the sum of household consumption, private investment, government spending and net exports. To understand this in terms of a stock-flow consistent macroeconomics, where we have to always trace the impact of flows during a period on the relevant stocks at the end of the period, we would interpret the spending components as flows adding to the stock of aggregate demand which in turn impacts on the final production (Gross Domestic Product).
Answer: False
The answer is False.
This is a very easy test of the difference between flows and stocks. All expenditure aggregates - such as government spending and investment spending are flows. They add up to total expenditure or aggregate demand which is also a flow rather than a stock. Aggregate demand (a flow) in any period and determines the flow of income and output in the same period (that is, GDP).
So while flows can add to stock - for example, the flow of saving adds to wealth or the flow of investment adds to the stock of capital - flows can also be added together to form a larger flow (for example, aggregate demand).