Q.Distinguish between a stock variable and a flow variable, and give two examples of each.

The distinction turns on the time dimension — a stock is measured at a point in time, a flow over a period of time.

The distinction between stock and flow variables rests entirely on the TIME DIMENSION.

A stock variable is a quantity measured at a PARTICULAR POINT IN TIME. It has no time dimension of its own — it is simply the amount that exists at one instant, like a photograph taken at a single moment. It is stated 'as on' a date. Examples: the stock of capital (machines, buildings) a country owns on a given date; the money supply as on 31st March; a household's wealth today; the population on the census date.

A flow variable is a quantity measured OVER A PERIOD OF TIME. It always carries a time dimension — 'per hour', 'per month', 'per year' — because it measures the RATE at which something happens during an interval, like a video recorded over a stretch of time. Examples: national income earned during a year; investment (the addition to capital) made during a year; a monthly salary; the volume of exports during a year. …

The commonest error is deciding by the magnitude or 'importance' of the variable rather than by its time dimension. The only correct test is 'at a point in time' (stock) versus 'over a period' (flow) — for …