There are two – and only two – kinds of variables in a system dynamics model: levels (or accumulations) and rates (or actions). Once you believe that there are only two kinds of concepts in a system, everything you look at has to be one or the other.
The existence of only two kinds of variables – levels and rates – is true of all systems. Levels – that is, things like number of employees, reputation of the firm, degree of trust within a group, and quality of products – state the condition to which a system has arrived at any point in time. They are gradually built up or degraded over time by streams of actions. Rates, by contrast, are controlled by the system policies that describe how decisions result from system levels.
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