GDP is a flow variable that measures the total value of goods and services produced in an economy over a specified period. The GDP measurement helps assess a country's economic output and growth rate.
Income represents the amount of money earned by individuals or businesses within a specific period, such as monthly wages or annual business revenues. Tracking income over time allows economists to analyze trends in earnings, spending capacity, and overall economic well-being.
Investment is a flow variable that indicates the amount of resources allocated towards capital goods, such as machinery, buildings, and infrastructure, over a specific period. This variable is crucial for understanding how much is being invested in the future productive capacity of an economy. For example, tracking quarterly investment in infrastructure can help policymakers evaluate the potential for future economic growth.
Net exports, the difference between a country's exports and imports over a certain period, is another flow variable. It helps determine the trade balance and its impact on the economy. Positive net exports indicate a trade surplus, while negative net exports represent a trade deficit.
Flow variables provide measurements of economic activities over specified periods. Popular examples of flow variables include GDP, income, expenditures, investment, and net exports. In cryptocurrency markets, some flow variables include transaction volumes, trading volumes, and on-chain activity.
The quantity of an economic resource measured at a specific point in time.
A variable in an economic model that impacts the model as an outside factor.
A variable in an economic model that is directly related to other variables in the same model.