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Question : 3
Total: 5
Distinguish between stocks and flows. Give an example of each.
Solution:
| Stock | Flow |
|---|---|
| (i) Stock refers to the value of a variable at a point of time. | Flow refers to the value of a variable during a period of time. |
| (ii) It is measured at a specific point of time. | It is measured per hour, per month or per year. |
| (iii) Stock impacts the flow. Greater the stock of capital, greater is the flow of goods and services. | Flow impacts the stock, greater the flow of income, greater is the stock of wealth with the people. |
| (iv) Example: Capital and quantity of money. | Example : Export and imports. |
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