Stock and Flow Concept in Economics

Transcript

Stock is a variable which is Measured at a Particular Point of Time Flow is a variable which is Measured over a period of Point What is Stock and Flow? Amt of Water flowing into tank per minute is example of flow Amt of Water in Tank at a particular time is an example of Stock. Amt of Water flowing from tap per minute is example of flow Economic Concept of Stock and Flow NATIONAL WEALTH NATIONAL INCOME It means total assets of a Nation at particular point of time It means value of goods and services produced by nation over a period of time This is Stock (Measured at a particular point of time) This is Flow (Measured over a period of time) Which has Time Dimension-Stock or Flow? Time Dimension means Measuring something from one point of time to another Stock is measured at a particular point of time (There is only one point OF TIME) Flow is measured over a period of time (from one point to another) (There are two points of time - Starting and ending) Hence Flow has Time Dimension (And not STOCK) Which is Static and Which is Dynamic Concept? Static means Something which is fixed Dynamic means Something which is continuously moving Lets take an example of Water flowing in Tank We know that Amt of Water flowing into tank per minute is example of flow Amt of Water in Tank is an example of Stock Amount of water in a tank at a particular point of time is static ( fixed) Hence, we can say Stock is Static Concept Amount of water flowing in a tank is dynamic (moving). Hence we can say Flow is Dynamic Concept. Difference between Stock and Flow Stock Flow It is a variable which is measured over a particular point of time. It is a variable which is measured over a period of time. It does not have time dimension It has time dimension It is Static Concept It is dynamic concept Example Example National Wealth as on 31 mar 2021 National Income for period 2020-21 Covid Cases as on 1 Apr 2020 Covid Cases Increased during April 2020 Total Money in Circulation as on 31 Mar 2021 New Money printed during 2020-21 NCERT Questions Q3 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. -a- Difference between stock and flow: Stock Flow It is a variable which is measured over a particular point of time. It is a variable which is measured over a period of time. It does not have time dimension It has time dimension It is Static Concept It is dynamic concept Example Example National Wealth as on 31 mar 2021 National Income for period 2020-21 Covid Cases as on 1 Apr 2020 Covid Cases Increased during April 2020 Total Money in Circulation as on 31 Mar 2021 New Money printed during 2020-21 Net Investment is a Flow Variable. Capital is a Stock Variable. An example of stock can be the amount or level of water in a tank. At any point of time the amount or the level of water in a tank can be measured. Similarly, the capital is also a stock variable, as the capital can also be measured at any point of time. Now, if water is flowing out of a tank through a tap, then the level of water will change over time. The difference in water level over an interval of time is an example of a flow variable. Similarly, net investment gives the difference in the investment level over a period of time. -ea- Other Books Q1 ____ variable refers to the variable, which is measured at a particular point of time. -a- Stock -ea- Q2 ___ variable are time dimensional. -a- Flow -ea- Q3 Real Flow is also known as ____. -a- Physical Flow -ea- Q4 State true or false with reasons. 1. National Income of a country is a Stock Concept. -a- False National Income of a country is a Flow concept as it is measured over a period of time. -ea-