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Question
Between net investment and capital, which is a stock and which is a flow?
Short Answer
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Solution
- Capital is a ‘Stock’: This is because capital (e.g., factory machinery, buildings) is measured by how much is available on a specific day or date.
- Net Investment is a ‘Flow’: This is because investment is a new addition made to the capital stock within a year or a specific period of time.
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Chapter 2: National Income Accounting - Exercises [Page 33]
