Concept of Stock and Flow in Economics

Concept of Stock and Flow in Economics 

The Aggregate of microeconomics are of two kind sum are  stocks, typically the stock of capital k which is a timeless concept. Even in period analysis a stock  must be specified at a particular movement. Other aggregate are flow or such as income and output, consumption and investment.A flow variable has the time dimension t, as per unit of time or per period.

Stock is the quantity of any economic variable relating to a point of time. For example, Store of cloth in a shop at a point of time is Stock.  Flow is the quantity of an economic variable relative of  a period of time.

The monthly income and expenditure of an individual, receipt  of early interest rate on various deposit in a bank, sale of commodity in a month or some example of flow.

Stock and flow are both variable in nature and the distinction between them should be studied carefully to understand the development of the economic variables.

Generally, most of the economic variable that are studied are categorised either as stock or flow  variable. Stock refer to any quantity that is measured at a particular point in a time, while Flow is referred to as the quantity that can be measured over a period of time.

Both the stock and flow are interdependent on each other, The concept of stock and flow is very essential in Economics, It help to understand the development of economic variables.