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Worked Examples · Example 1

Q.Classify each of the following as a STOCK variable or a FLOW variable, giving a one-line reason for each:

(i) The amount of money in your bank account as on 31st March.
(ii) A worker's salary of ₹30,000 per month.
(iii) The total capital (machines and buildings) owned by a factory today.
(iv) The investment made by a firm during the financial year.
(v) A country's population on the census date.
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The test in each case is whether the variable is measured at a PARTICULAR POINT in time (a stock) or OVER A PERIOD of time (a flow — signalled by phrases like 'per month' or 'during the year').

  1. Stock. The money in a bank account 'as on 31st March' is an amount existing at a single instant — a snapshot — so it is a stock variable.
  2. Flow. A salary of ₹30,000 'per month' carries a time dimension (per month); it measures income earned over a period, so it is a flow variable.
  3. Stock. The total capital a factory owns 'today' is the amount of assets in existence at one point in time — a stock.
  4. Flow. Investment made 'during the financial year' is the addition to capital over a period; it carries a time dimension, so it is a flow. (Note how this flow, accumulated, changes the capital stock in (iii).)
  5. Stock. A country's population 'on the census date' is the number of people existing at one moment — a stock.
    ✓Final answer

    Stocks (measured at a point in time): (i), (iii), (v). Flows (measured over a period): (ii), (iv). The presence of a time dimension such as 'per month' or 'during the year' is the clearest sign of a flow.

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