Like individuals, governments must allocate their resources to different sectors of the economy. Public finance is how federal, state, and local institutions track revenue and manage expenses for all the services they provide to the public.
Some of a government’s most essential functions include collecting money from the public sector via taxes, raising capital through bonds, and channeling money into a broad range of services that benefit the public. When the public sector distributes tax revenues across multiple functions, including debt servicing, infrastructural development, and recurring expenditures. By overseeing income generation and government spending, government agencies help ensure a stable economy and prevent market failure.
Other aspects of public finance include tax management, debt issuance, budgeting, international trade, and inflation regulation. These factors have a direct and lasting effect on business and personal finance.
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