question_answer

Distinguish between stock and flow variables with suitable examples.

Or

What are capital goods? How are they different from consumption goods?

Answer:

Difference between stock and flow:
Stock	Flow
(i) Stock relates to a point of time, e.g. your saving as an January 1, 2014 are Rs 10,000.	Flow relates to the period of time, e.g. your pocket expenses of Rs 20 per day.
(ii) Stock is not time dimensional.	Flow is time dimensional as per hour, per month, per year.
(iii) Stock influences the flow, Greater the stock of capital, greater is the flow of goods and services.	Flow influence the stock. For example, monthly increase in the quantity of money.
(iv) Example ? population of a country, Bank deposit etc.	expenditure of money, interest on capital etc.
Or
Difference between capital goods and consumption goods:
Consumption goods	Capital Goods
(i) Goods which are consumed for their own sake to satisfy current needs of the consumers directly are consumption goods.	Capital goods are fixed assets of producers which are repeatedly used in production of other goods and services.
(ii) These are used for achieving satisfaction.	These are used for generating income by production units.
(iii) Consumption goods meet the basic objective of an economy i.e. to sustain the consumption of entire population of the economy.	Capital goods are producer?s goods which are repeatedly used in production process for generating income.
(iv) For example?food, shoes, retailers, barbers etc.	For e.g. Machine, Tools, Technology etc.