Public Finance Basics Flashcards
Understand the foundation's of Public Finance
What is Public Finance?
Public finance is the management of a country’s revenue, expenditures, and debt load through various government and quasi-government institutions.
This revolves around Tax collection, National/State debt, Deficit/Surplus, Expenditures, National/State budget.
What are facts about revenue?
- Main revenue source is tax collection.
- Examples are: sales tax, income tax, estate tax, property tax.
- Other types: duties, tariffs on imports, non-free public services, penalties, fines, import duty.
What is a budget?
A plan of what the government intends to have as expenditures in a fiscal year.
What are expenditures and what are some examples?
They are expenses that the government actually spends money on. The goal is to benefit society as a whole. Examples: social programs, education, infrastructure.
How does a municipality finance Government expenditures?
- Taxes (sales tax, income tax, etc.)
- Debt (loans ,issue bonds, financial investments)
- Seigniorage (currency issuance)
- Fees (manufacturing license fee)
What is Seigniorage?
Net revenue generated by currency issue. Difference between face value of a coin or banknote and its prod ,dist ,and eventual retirement costs.
What are the goals of Public Finance?
- Managing public funds
- Economic development
- Eliminating inequality
- Retaining price stability
- Satisfying the nation’s fundamental needs
- managing the currency value in the international market.
What are the main components of Public Finance?
- Revenue Collection
- Budget Preparation
- Public Expenditure
- Assessing Debt/Investment Need
How does a municipality manage public needs?
- Food
- Shelter
- Health
- Infrastructure
- Education
What are objective examples of municipalities?
- Fulfilling basic needs of the community
- Generating employment
- Maintaining the currency value in the international market (national level)
