STOCK VS FLOW MACRO ECONOMICS

• STOCK VS FLOW
  MACRO ECONOMICS
• MEANING OF VARIABLE

1. IT REFERS TO THE QUANTITY THAT MAY VARY OVER A RANGE
2. VARIABLE CAN BE DEFINED AS A MEASURABLE OR SCALABLE MAGNITUDE WHICH VARIES AND IN WHOSE VARIATION WE HAVE AN INTEREST,PARTLY BECAUSE OF DIRECT IMPORTANCE AND PARTLY BECAUSE OF ITS EFFECT ON OTHER VARIABLES
3. A VARIABLE MAY BE EITHER STOCK OR FLOW. DEPENDENT VARIABLE AND INDEPENDENT VARIABLE OR EXOGENOUS VARIABLE AND ENDOGENOUS VARIABLE

• STOCK VARIABLE( ENDOGENOUS)

1. THE STOCK VARIABLE REFERS TO THE QUANTITY OF A COMMODITY AT A POINT OF TIME I.E ON 31 ST MARCH 2019
2. VARIABLES THAT ARE MEASURED WITH REFERENCE TO A POINT OF TIME
3. NUMBER OF BOOKS IN LIBRARY ON PARTICULAR DATE IS STOCK
4. AMOUNT IN SAVING ACCOUNT ON PARTICULAR DATE IS STOCK

• FLOW VARIABLE( EXOGENOUS)

1. FLOW VARIABLES ARE THE VARIABLES THAT ARE EXPRESSED PER UNIT OF TIME I.E PER HOUR,PER WEEK,PER MONTH OR PER YEAR
2. A QUANTITY OF THE CURRENT PRODUCTION OF A COMMODITY WHICH MOVE FROM A FACTORY TO THE MARKET IS FLOW
3. MONTHLY INCOME AND EXPENDITURE OF AN INDIVIDUAL ARE THE EXAMPLES OF FLOW

• USES OF THE CONCEPT OF STOCK AND FLOW

• USES IN MICRO ECONOMICS:-THE CONCEPT OF STOCK AND FLOW ARE RELATED TO THE DEMAND AND SUPPLY OF GOODS.THE MARKET DEMAND AND SUPPLY AT A POINT OF TIME ARE EXPRESSED STOCK. THE STOCK DEMAND CURVE SLOPES DOWNWARD AND SUPPLY STOCK CURVE SLOPES UPWARD AND FLOW DEMAND AND SUPPLY ARE INFLUENCED BY THE PRICE. PRICE IS NEITHER STOCK OR FLOW. RATIO OF FLOW OF CASH AND FLOW OF GOODS
• USES IN MACRO ECONOMICS:-MONEY IS STOCK BUT SPENDING OF MONEY IS FLOW

a)    WEALTH IS STOCK AND INCOME IS FLOW

b)    SAVING BY A PERSON WITH IN THE MONTH IS FLOW BUT ON PARTICULAR DAY IS STOCK

• EXAMPLE

a)    STOCK

b)    STOCK OF CAPITAL (K)

c)    SUPPLY OF MONEY(M)

d)    INVENTORY

e)    TOTAL EMPLOYMENT

f)     ACCUMULATED SAVING

• FLOW

1. GROSS NATIONAL PRODUCT(GNP)
2. CONSUMPTION EXPENDITURE(C)
3. SAVING AND INVESTMENT
4. EXPORT AND IMPORTS
5. CHANGES IN INVENTORY

• DIFFERENCE BETWEEN STOCK AND FLOW
• STOCK

1. IT IS THAT QUANTITY OF AN ECONOMIC VARIABLE WHICH IS MEASURED AT PARTICULAR POINT OF TIME
2. IT HAS NO TIME DIMENSION
3. STATIC CONCEPT

• FLOW

1. IT IS THAT QUANTITY OF AN ECONOMIC VARIABLE WHICH IS MEASURED DURING A PERIOD OF TIME
2. IT HAS TIME DIMENSION AS PER HOUR,PER DAY ,PER MONTH
3. DYNAMIC CONCEPT