Distinguish between stock and flow. Between net investment and capital which is a stock and which is a flow ? Compare net investment and capital with
Distinguish between stock and flow. Between net investment and capital which is a stock and which is a flow ? Compare net investment and capital with flow of water into a tank.
1 Answers
The main differences between stock and flow are.
(i) Stock is related to a point of time whereas flow is related to a period of time.
(ii) A stock is a quantity measurable at a particular point of time whereas a flow is a quantity which is measured over a specific period of time.
(iii) Capital is a stock variable wheras net investment is a flow variable.
Net investment is a flow whereas capital is a stock. Amount of water in a tank at a particular point of time is a stock concept (as capital), whereas amount of water flowing into it is a flow concept (as not investment).