Economics · Ch 2 — Fundamental Concepts and Terminologies
Stock and Flow
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Stock and Flow
Many economic quantities can be properly understood only once we know whether they are measured at a point in time or over a period of time.
- A stock is a quantity measured at one particular point in time — it has no time dimension. Examples: wealth (as on 31 March), capital, population (as on 1 January), money supply on a given date.
- A flow is a quantity measured over a period of time — it necessarily carries a time dimension (per day, per month, per year). Examples: income (per month), investment (per year), the number of births (per year), a firm's output (per quarter).
| Stock | Corresponding Flow |
|---|---|
| Wealth (on a given date) | Income (per year) |
| Capital (on a given date) | Investment (per year) — the addition to capital during the year |
| Population (on a given date) | Births/deaths (per year) |
| Water in a tank (at a moment) | Water flowing in/out (per minute) |
Definition 1Stock
A quantity measured at one point in time, with no time dimension (e.g., wealth, capit …
Definition 2Flow
A quantity measured over a period of time (e.g., income, investme …