1.

Distinguish between stock and flow, in the case of net investment and capital, which is a stock and which is a flow? Compare net investment and capital with flow of water in a tank.

Answer»
Stock Flow
Stock relates to a point of time.Flow relates to a period of time.
Stock is not time dimensional.Flow is time dimensional as per hour, per month, per year.
Stock influences the flow. Greater the glow 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.
Example: Wealth, capital, etc.Example: Income, capital formation.

Between net investment and capital, capital is a stock since it is measured over a point of time and net investment is a flow since it is measured over a specified period of time.


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