Economic Activities and the State: Public Finance
Document from the year 2013 in the subject Politics - Miscellaneous, St. Lawrence University (SCHOOL OF POSTGRADUATE STUDIES), language: English, abstract: The basic nature of any economy lies in the scarcity of its productive resources in relation to its want. Our wants are ever increasing and recurring while availability of resources for satisfying them lags behind. An economy is constantly engaged in the solution of this eternal problem of scarcity. It therefore, undertakes various activities where by the available supply of resources is augmented, existing supplies are utilized more effectively, and some additional objectives like stability, growth, and distribution etc are met with as fully as possible. The division of economic activities between public and private sectors of the economy should not be a haphazard one, but should be based upon relevant economic and socio-political objectives and within the constraints of the country’s institutional framework. Accordingly, in a capitalist economy the main task of providing goods and services is assigned to the private sector in which individual economic units are motivated by economic rationality and guided by the market mechanism in their decision making. The owners of factors of production are guided by the income which they earn in alternative employments, the investors are guided by the profitability of alternative investments; the consumers try to maximize their consumer surplus and so on. In a pure market economy, virtually all goods and services are supplied by the private firms for profit and all exchanges of goods and services takes place through markets, with prices determined by free interplay of supply and demand. Individuals would be able to purchase goods and services freely, according to their tastes and economic capacity( their income and wealth), given market determined prices.
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administration aggregate demand allocation amount authorities benefits bond holders canon capital accumulation central bank consumer consumption corrective tax debt management developed countries development planning distribution double taxation economic activity economic development economic growth Economic planning economic unit effective demand effects of public efficiency employment example external costs fiscal policy funds government activities government bonds government borrows government expenditures Hence important income and wealth increase indirect taxation individual industry inequalities of income inputs interest rates internalize levied loans long term marginal costs market mechanism monetary policy objectives output payment political possible private and social private sector problem productive resources progressive tax projects public borrowing public debt public enterprises public expenditure public sector purchase pure public raising rational income reduce requirements result role save and invest Similarly society supply tax incidence tax payers tax revenue tax system taxable capacity tendency underdeveloped countries various