Distinguish between stock and flow, in the case of net investment and capital

cbse-class-12

#1

Distinguish between stock and flow, in the case of net investment and capital, which is a stock and which is a flow? Compare net investment and capital with flow of water in a tank.


#2

distinguish-between-stock-and-flow-in-the-case-of-net-investment-and-capital-4

Net investment, which is the addition to the stock of capital is measured during a period of time, hence is a flow concept. On the other hand, capital which is measured at a point of time is a stock concept. For example, the amount of water which is flowing into the tank from the tap per minute is a flow variable. In the same manner, net investment will flow continuously during a period is . considered as a flow. On the other hand, capital which is fixed at a point of time is like the water at a particular point of time which will be considered as a stock variable.