Fundamental of Economics

Public Finance deals with the question how the government raises its resources to meet its ever-rising expenditure. According to Dalton , “Public finance is concerned with the income and expenditure of public authorities and with the adjustment of one to the other.” Major Function of Public Finance: · Allocative Function: Allocative function deals with the question what are the sources of government revenue, i.e. how much amount government will earn from each earning source. · Distributive Function: Distributive function deals with the question what are the categories of government expenditure, i.e. how much amount government will spend for each common benefit for the people of the country. · Stabilization Function: Stabilization function deals with the fiscal policies which ought to be adopted to achieve certain objectives such as price stability, economic growth, more equal distribution of income. Importance of Public Finance or Reas