. Distinguish between stock and flow
Between net investment and capital which is a stock and which is a flow?
Best Answer
Explanation:
The differences between stock and flow are as follows:
|
Sl no. |
Stock |
Flows |
|
1.
|
It means the quantity of an economic variable that is measured at a particular point in time. |
It means the quantity of an economic variable that is measured during a period of time. |
|
2.
|
It has no time dimension as its magnitude is measured at a particular point of time. |
It has time dimensions like per day, per hour, month and year. |
|
3.
|
It is a static concept. Examples - Wealth, bank deposits., a hundred rupee note. |
It is a dynamic concept. Examples- Income/ Investment. Interest on capital, capital formation, monetary expenditure. |
Net investment is a flow concept because it measures over a period of time.
Capital is a stock concept because it measures at a particular point of time.
Final Answer:
Stock isis those variables whose quantity is measured at a particular point in time, whereas flows are those whose quantity is measured over time.
Net investment is a flow concept, whereas capital is a stock concept.
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