Stock and Flow
1 Quick Explanation 1–3 min
A stock is measured at a point of time; a flow is measured over a period of time.
Example: water in a tank is a stock; water flowing per hour is a flow.
2 Detailed Notes
Definition
Definitions
Stock: a variable measured at a particular point of time — it has no time dimension (e.g., national wealth on 31 March). Flow: a variable measured over a period of time — it has a time dimension (e.g., income per year, consumption per month).
Comparison
Classification
| Basis | Stock | Flow |
|---|---|---|
| Time | Point of time | Period of time |
| Concept | Static (no time dimension) | Dynamic (time dimension) |
| Examples | Wealth, capital, bank deposits, money supply | Income, savings, investment, expenditure |
| Units | Quantity at a date | Quantity per period |
Important
Golden rule for exam
If the quantity can change 'during a year/month', it's a flow. If it is 'as on a date', it's a stock. Capital is a stock; investment (change in capital) is a flow.
Formula
Stock → flow link
Investment (flow) = Change in Capital stock = ΔKFlow variables like investment are measured as the change in a stock variable over a period.
In One Minute
Stock = measured at a point of time (wealth, capital, deposits). Flow = measured over a period (income, investment, expenditure).
Important for Exam
- ⭐ 1-mark question: 'Which are flows — income, wealth, saving?'
- ⭐ Common trick: savings (flow) vs savings with a bank (stock).
- ⭐ National income and investment are flows; capital stock is a stock.
- ⭐ Money supply is a stock; money creation in a year is a flow.
Watch & Learn
Watch on YouTubeNational income - Stock vs Flow - Class 12 - Economics - PART - 2
by Rajat Arora
Why watch? Very short and exam-oriented with examples.
Open on YouTube Watch on YouTubeNational income - Stock vs Flow - Class 12 - Economics - PART - 2
by Rajat Arora
Why watch? Clear table-based comparison.
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