Distinguish between stock and flows. Give an example of each.
|A stock is a variable which is measured at a particular time.||Flow is a variable which is measured over a long period of time|
|A stock is stat||Flow is dynamic|
|The time dimension is not applied to
the stock concept.
|The time dimension is applied to the
|Examples: National wealth and
|Examples: National income and
interest on capital
In a tank of water, the flow of water can be considered a flow variable and the stock of water can be considered a stock variable because it can be measured at a particular point of time. Capital is like the stock of water in the tank at a particular point of time, whereas net investment is like the flow of water into the tank.