Question: Question 1: (50 marks -500 wards ) The relationship between stocks and flows is a critical issue where it is very important to understand that

Question 1: (50 marks-500 wards)

The relationship between stocks and flows is a critical issue where it is very important to understand that the net rate of change of a stock is the sum of all its inflows less the sum of all its outflows. Stocks accumulate the net rate of change. Mathematically, stocks integrate their net flows; the net flow is the derivative of the stock.

a. Explain what is meant by integration and differentiation (40 marks)

b. Use illustration diagrams to explore the above (10 marks)

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