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Is Money Supply Stock or Flow?

 

Lets first learn concept of Stock and Flow in General Sense

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Now lets learn about Stock and Flow in case of Money

Is Money Stock or Flow Variable - Teachoo.JPG

Is Money Supply Stock or Flow?

What is Money Supply in an Economy - Teachoo.JPG

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Transcript

Is Money Stock or Flow Variable ? Example Suppose I have Rs 50000 in my bank account as on 1 Jan I spent 10000 during the month of January Now I am left with 40000 as on 31 Jan What is Stock and Flow in above case? Bank Balance as on 1 January Cash Withdrawn During January Bank Balance as on 31 January It is Stock (Measured at Particular Point of Time) It is flow (Measured over a period of time) It is Stock (Measured at Particular Point of Time) Difference Between Stock and Flow Stock It is variable measured at a Particular Point of time Example – Bank balance as on 31st Jan It is variable measured over a period of time Period- Cash withdrawn during January Flow What is Money Supply in an Economy What is Money Supply? It is total stock of Money in circulation with public at a particular point of time Example As per RBI Press Release, total money supply as on 31 March 2021 was Rs 188 Lakhs Crores Is Money Supply Stock or Flow? Money Supply is Measured at a Particular Date So it is a Stock

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Davneet Singh

Davneet Singh is a graduate from Indian Institute of Technology, Kanpur. He has been teaching from the past 12 years. He provides courses for Maths and Science at Teachoo.