Capital stock
Topic: National Income Accounting: GDP, GVA and Welfare · NCERT: Class 12, Ch 2 "National Income Accounting"
Meaning
Capital stock is the total amount of capital goods an economy has at a point of time. Capital goods are things like machines, buildings, tools and roads. It is a stock, so it is measured at a moment, not over a period. It grows through net investment, and it shrinks as old capital wears out (depreciation). A bigger capital stock raises the economy's capacity to produce in the future.
Example
A machine installed in a Ludhiana factory in 2020 stays in India's capital stock for many years. It is counted in the flow of new investment only in 2020, the year it was installed.
Don't confuse with
- Investment: investment is a flow over a year that adds to the capital stock. Capital stock is the total amount present at one moment.
Related concepts
- Final goods
- Intermediate goods
- Consumer goods
- Consumer durables
- Capital goods
- Double counting
- Stock variable
- Flow variable
- Investment
- Gross investment