Stock and Flow - Sir Irving Fisher has spoken in terms of a...

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Stock and Flow: The concept of capital is essentially a stock concept. Such a stock of goods produces income for future consumption opportunities. A house purchased with an investment of $15,000 today will bring in rent for the future 20 years or so. Investment in the house is the stock and future rent is an income flow.
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Unformatted text preview: Sir Irving Fisher has spoken in terms of a cherry tree which is the stock and cherries that are collected every day as the flow of income. Flow comes only when stock is present. Therefore in order to enrich future income one has to build the stock and improve it from time to time....
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