Give reasons for following(6MARKS)(i) Capital is stock but capital for – InterviewSolution

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1.	Give reasons for following(6MARKS)(i) Capital is stock but capital formation is flow variable.(ii)Income is a flow variable and flow of income is circular.
Answer» Capital formation is a flow,because it is measured over a period of TIME while capital is stock because it is a quantity measured at a specific point of time. The circular flow of income or circular flow is a model of the economy in which the major exchanges are represented as FLOWS of money, goods and services, ETC. between economic agents. The flows of money and goods exchanged in a closed circuit correspond in VALUE, but RUN in the opposite direction.

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