3 ms·
The point is that the flow is not the same as the change in stock. If A is the stock of wealth, people tend to think that GDP is dA/dt. It is not. It is more
by FiatLuxDave 9y ago
The point is that the flow is not the same as the change in stock. If A is the stock of wealth, people tend to think that GDP is dA/dt. It is not. It is more like dA/dt + dD/dt - dW/dt + ...
These extra terms are things like increase in debt, change in mean velocity of money, usage of non-durable goods, etc. Confusing GDP for wealth flow is ignoring some of the largest factors in its calculation.