This document discusses factors of production, factor payments, and the differences between stock and flow variables as well as real and money flows. It defines factors of production as resources used to produce goods and services and divides them into four categories: labor, land, capital, and entrepreneurship. It also defines factor payments as the income received for supplying factors of production, divided into four categories: rent, wages, interest, and profits. Finally, it outlines the key differences between stock and flow variables, and real and money flows.

2.  Factors of Production / Factor Services
 Factor Payments
 Stock variable
 Flow variable
 Real flow
 Money flow

3. • The factors of production are resources that are
the building blocks of the economy; they are
what people use to produce goods and services.
• Economists divide the factors of production into
four categories:
Labor.
Land.
Capital.
Entrepreneurship.

5. • The income people receive for supplying the factors of
production : land, labor, capital or entrepreneurship.
• They are also categorized according to the services of the
productive resources being rewarded.
• Economists divide the factors payments into four
categories:
Rent
Wages
Interest
Profits

8. BASIS OF
DIFFERENCES
STOCK FLOW
MEANING An economic variable
which is calculated at a
particular point of time
An economic variable
which is calculated during
a period of time
NATURE Static Dynamic
TIME DIMENSION No time dimension Time dimension
EXAMPLES 1) Water in a tank
2) Individual’s wealth
3) People with college
degrees
4) Govt’s debt
5) Distance
1) Water in a river
2) Individual’s saving
3) New college
graduates
4) Govt’s budget deficit
5) Speed

10. MONEY FLOW

11. REAL FLOW AND MONEY FLOW
BASIS OF
DIFFERENCES
REAL FLOW MONEY FLOW
MEANING It is the flow of goods and
services between firms
and households.
It is the flow of money
between firms and
households.
KIND OF EXCHANGE It involves exchange of
goods and services.
It involves exchange of
money.
DIFFICULTY IN
EXCHANGE
There may be difficulties
of barter system in
exchange of goods and
factor services.
There is no such difficulty
in case of money flow.
ALTERNATIVE NAME Physical Flow Nominal Flow

12. REAL FLOW AND MONEY FLOW