Distinguish between stock and flow. Between net investment and capital which is a stock and which is a flow? Compare net investment and capital with flow of water into a tank.
The main differences between stock and flow are being listed below –
Basis of Difference
Stock refers to quantity of a variable which is measured at particular point of time.
Flow refers to quantity of a variable which is measured over a period of time.
It has no time dimension
It has time dimension as per hour, per day, per month.
It is static concept.
It is dynamic concept
Quantity of money, wealth, etc
Consumption, Investment, etc
Suppose if we take example of water tank, the water level (capital) is stock because it can be measured at a point of time and flowing water into the tanks (investment) is flow because it is measured over a period of time.
Net National Product at Factor Cost of a particular country in a year is Rs 1,900 crores. There are no interest payments made by the households to the firms/government, or by the firms/government to the households. The Personal Disposable Income of the households is Rs 1,200 crores. The personal income taxes paid by them is Rs 600 crores and the value of retained earnings of the firms and government is valued at Rs 200 crores. What is the value of transfer payments made by the government and firms to the households?
(a) Net Domestic Product at factor cost
(b) Net Factor Income from abroad
(c) Undisbursed Profit
(d) Corporate Tax
(e) Interest Received by Households
(f) Interest Paid by Households
(g) Transfer Income
(h) Personal Tax
In a single day Raju, the barber, collects Rs 500 from haircuts; over this day, his equipment depreciates in value by Rs 50. Of the remaining Rs 450, Raju pays sales tax worth Rs 30, takes home Rs 200 and retains Rs 220 for improvement and buying of new equipment. He further pays Rs 20 as income tax from his income. Based on this information, complete Raju’s contribution to the following measures of income (a) Gross Domestic Product (b) NNP at market price (c) NNP at factor cost (d) Personal income (e) Personal disposable income.
The value of the nominal GNP of an economy was Rs 2,500 crores in a particular year. The value of GNP of that country during the same year, evaluated at the prices of same base year, was Rs 3,000 crores. Calculate the value of the GNP deflator of the year in percentage terms. Has the price level risen between the base year and the year under consideration?