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Question : 6
Total: 15
Distinguish between stock and flow variables with suitable examples.
Solution:
Difference between stock and flow variables is:
| Stock | Flow |
|---|---|
| (i) Stock relates to a point of time, e.g. your saving as on January 1,2014 are | Flow relates to the period of time, e.g. your pocket expenses of |
| (ii) Stock is not time- dimensional. | Flow is time-dimensional as per hour, per month, per year. |
| (iii) Stock influences the flow, greater the stock of capital, greater is the flow of goods and services. | Flow influences the stock. For example, monthly increase in the supply of money leads to an increase in the quantity of money. |
| (iv)Example - Popultion of a country, Bank deposit etc. | Expenditure of money, interest on capital etc. |
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