The basic difference between stock and flow is the time dimension. Here, the stock refers to the value calculated at a point of time. In the contrast, flow indicates the value of variables during a period of time.
To know the difference between these two, we must clear the meaning of these terms:
Meaning of stock:-
Stock refers to the amount or value of a commodity or any variable at a particular point of time. In other words, it describes the state of the economy at a particular time. Hence, the concept of the stock is related to an extremely small period of time.
For example, Suppose, on1st January 2021, The govt has 10 crore rupees as government debt in the economy. It will be known as stock as it is valued at a particular point of time.
For microeconomics, the stock concept is related to only the demand for and supply of goods and services at a point of time. On the other hand, the flow concept is related to many variables. It includes wealth, government debt and supply of money etc.
Meaning of flow:-
Flow refers to the amount or value of a commodity or any variable during a particular period of time. In other words, it describes the changes in variables of the economy during a particular time. Hence, the concept of flow is related to a long period of time.
For example, Suppose, during a month job, you are earning Rs.15,000 as basic pay, 2,000 as special allowance and Rs.3,000 for transportation expenses. Thus, all these values are considered as flows as these are not related to a specific point of time.
For microeconomics, the flow concept is related to only the demand for and supply of goods and services during a period of time. On the other hand, in macroeconomics, this concept is related to many variables. It includes income, the expenditure of money, capital formation and interest on capital etc.
Chart of Difference between Stock and Flow :
| Basis of Difference | Stock |
Flow |
| Meaning |
It refers to th value of a variable at a specific period of time. |
It refers to the value of a variable during a specified period of time. |
| Time dimensional | It is not a time dimensional. | Flow is a time dimensional concept. |
|
Nature |
It is static in nature. | It is dynamic in nature. |
|
Indicates |
Stock indicates the level of a variable at a point of time. | Flow indicates the rate of a variable during a point of time. |
|
Reflection |
Here, the state of the economy is reflected at a particular time. | Here, the changes in variables of the economy are reflected during an interval of time. |
|
Measured in |
Stock is always measured in units. | On the other hand, flow is always measured as per the unit time. |
|
Interdependency |
Stock impacts the flow. | The flow impacts the stock. |
|
Influence |
Large stock of capital results in a greater flow of goods and services. | A large flow of goods and services leads to more stock of wealth with the people. |
|
Examples |
Wealth, labour force, capital, the population of a country, bank deposits, the supply of money are some examples of stock variables. | Income, the expenditure of money, capital formation, interest on capital, sales of rice and number of births are some examples of flow variables. |
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Conclusion:
Thus, there is a little difference between stock and flow. But, it is important to note that certain concepts in economics are studied only as flow variables and certain as stock variables.
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