What is Stock and Flow in economics class 12

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In Macroeconomics all variables are classified as stock & flows. There all lot of variable economic aspects in economics for example income, saving, production, expenditure, demand etc.

All these economic variables are either stock or flow.

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Stock

Variables whose magnitude is measured at a particular point of time are called stock variables.

For example:-

Assets, Liabilities, wealth, inventory, capital as all these variable are calculated at as on 31st march.

Note:- In simple words all items in balance sheet are stocks variables.

Flow

Variables whose magnitude is measured over a period of time are called flow variables.

For Example:-

Income, output, expenditure, investment, intermediate costs, net change in stock, sale, purchase, revenue expenditure, other income

Difference b/w Stok & Flows

S.NStockFlow
1Stock refers to the magnitude of a variable at a point of timeFlow refers to the value of a variable during a period of time.
2Stock is not dimensional. it is measured at a specific point in time.Flow is time dimensional. It is measured per hour, per month, or per year.
3Stock impacts the flow. greater the stock of capital, the greater is the flowof goods and services.The flow impacts the flow. Greater the flow of income, greater is the stock of wealth with the people

Examples of Stock

  1. Wealth
  2. Labour Force
  3. Capital
  4. Supply of Money
  5. Bank Deposits
  6. Water in the overhead tank
  7. Distance between Delhi and Mumbai
  8. Rice stored in a godown
  9. The population of a country

Examples of Flow

  1. Income
  2. Expenditure of Money
  3. Capital Formation
  4. Change in the supply of money in a country
  5. Interest on Capital
  6. Leakage of water from the overhead tank.
  7. Speed of a car going from Delhi to Mumbai
  8. Sales of rice
  9. The number of births.

MCQ of Stock and flow macroeconomics Class 12

1 Which of the following is not a flow variable?

a) Income

b) Capital Formation

c) Supply of money in a country

d) Leakage of water from the overhead tank

Ans. C

2. Which of the following is a stock variable?

a) Interest of capital

b) Distance between Delhi and Manali

c) Expenditure of Money

d) All of these

Ans b

3. A car running between Delhi to Agra at a speed of 120km/h includes

a) only stock variables

b) only flow variables

c) both a stock and a flow variable

d) none of these

Ans C

4. Income of the family is the example of which variable?

a) Stock

b) Flow

c) Both stock and flow

d) Neither stock nor flow

Ans b

5. A quantity measured per unit of time period is known as:

a) stock variable

b) flow variable

c) inventory

d) none of these

Ans b

6. A stock variable

a) has no time dimension

b) is a static concept

c) both a) and b)

d) None of these

Ans c

Few more examples of Stock and Flows.

  1. Investment – Flow
  2. Monetary Expenditure – Flow
  3. A family consumption of sugar – Flow
  4. Services of a tutor – Flow
  5. Production of Cement – Flow
  6. The machinery of a Sugar Mill – Stock
  7. A hundred rupee note – Stock (As the stock is part of the Money supply)
  8. Capital – Stock
  9. Consumption – Flow
  10. Expenditure – Flow
  11. Income – Flow
  12. GDP – Flow
  13. Money Supply – Stock
  14. Bank Deposits (Bank Balance) – Stock
  15. Demand – Flow
  16. Supply – Flow
  17. Aggregate Supply – Flow
  18. Aggregate Demand – Flow
  19. Savings – Flow
  20. Balance of Payments – Flow

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