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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Variables whose magnitude is measured at a particular point of time are called stock variables.
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.
Variables whose magnitude is measured over a period of time are called flow variables.
Income, output, expenditure, investment, intermediate costs, net change in stock, sale, purchase, revenue expenditure, other income
Difference between Stock & Flows variables
|1||Stock refers to the magnitude of a variable at a point of time||Flow refers to the value of a variable during a period of time.|
|2||Stock 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.|
|3||Stock impacts the flow. The greater the stock of capital, the greater is the flow of 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
- Labour Force
- Supply of Money
- Bank Deposits
- Water in the overhead tank
- Distance between Delhi and Mumbai
- Rice stored in a godown
- The population of a country
Examples of Flow
- Expenditure of Money
- Capital Formation
- Change in the supply of money in a country
- Interest on Capital
- Leakage of water from the overhead tank.
- Speed of a car going from Delhi to Mumbai
- Sales of rice
- The number of births.
MCQ of Stock and flow macroeconomics Class 12
1 Which of the following is not a flow variable?
b) Capital Formation
c) Supply of money in a country
d) Leakage of water from the overhead tank
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
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
4. Income of the family is the example of which variable?
c) Both stock and flow
d) Neither stock nor flow
5. A quantity measured per unit of time period is known as:
a) stock variable
b) flow variable
d) none of these
6. A stock variable
a) has no time dimension
b) is a static concept
c) both a) and b)
d) None of these
Few more examples of Stock and Flows.
- Investment – Flow
- Monetary Expenditure – Flow
- A family consumption of sugar – Flow
- Services of a tutor – Flow
- Production of Cement – Flow
- The machinery of a Sugar Mill – Stock
- A hundred rupee note – Stock (As the stock is part of the Money supply)
- Capital – Stock
- Consumption – Flow
- Expenditure – Flow
- Income – Flow
- GDP – Flow
- Money Supply – Stock
- Bank Deposits (Bank Balance) – Stock
- Demand – Flow
- Supply – Flow
- Aggregate Supply – Flow
- Aggregate Demand – Flow
- Savings – Flow
- Balance of Payments – Flow