Question

Compare net investment and capital with the flow of water into a tank.

Answer 1

• Capital – Water Level in the Tank (Stock): The exact amount of water present in the tank at a specific moment (e.g., 500 litres of water at 9:00 AM) represents ‘Capital’.
• Net Investment – Flow of Water from the Tap (Flow): The water entering the tank from the tap over a period of time (e.g., 5 litres per minute) represents ‘Net Investment’.