Difference between stock and flow

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

Generally, most of the economic variables that are studied are categorised either as stock or flow variable. Stock refers to any quantity that is measured at a particular point in 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, as it helps to understand the development of economic variables.

Let us study some of the differences between stock and flow in the following lines.

Stock

Flow

Definition

Stock is defined as a variable that is measured at a particular point in time

Flow is defined as a variable which is measurable over a period of time

Time Dimension

Stock does not have a time dimension attached with it

Flow has a time dimension attached with it

Nature

Stock is static in nature

Flow is dynamic in nature

Influence

Stock influences the flow, as such greater amount of capital will lead to greater flow of services

Flow influences the stock, as in increased flow of money supply in an economy results in increase in the quantity of money

Examples

Bank deposits, capital, wealth, population

Capital formation, income, interest on capital, depreciation

This article was all about the topic of Difference between Stock and Flow, which is important for Commerce students. For more such interesting articles, stay tuned to BYJU’S.

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