Purpose of economic activity is to improve welfare and better standard of living and to do this you need to;
Increase level of consumption in return Economy produces more output/national income.
Stocks - something gathered overtime and measured at a particular point e.g. wealth
- national capital stock - natural resources and capital goods gathered from previous production
- stock of human capital - skills of working population
Flow - something continuous (flow of income) that's measured per period of time e.g weekly
National income is the flow of new output produced during a period of time combining stocks of physical and human capital. Measured by:
National product = National income = National expenditure
because they mean the same thing.