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In economics, the word public is generally used to refer to what belongs or related to the
country or the community as a whole. Then public economics refers to economic activities
related to government, public or community as a whole.
Therefore, Public economics is concerned with public expenditure, and public revenue
The Principle of maximum social benefits: the majority of people must get maximum
authority like the parliament or any other policy making body before its implementation.
The principle of balanced budget: Every government must try to keep its budget well
balanced. Therefore, government spending should be in budget lines with aim of limiting
wastage of government resources.
The principle of avoidance for unhealthy effects on production or distribution: the
Public expenditure can also be used to correct the balance of payment deficit. This can be
done by reducing expenditure on imports thereby improving on balance of payment
position of a country.
Public expenditure can be used to establish good relations with other countries for
example when the government spends on assistance to other countries.
1.5 Problems faced in effecting public expenditure.
The people who benefit more from public expenditure are different from those who
contribute to public or and it is difficult to balance the interest of this group.
There is a problem on balancing the regional allocation of public expenditure on public
goods like roads and hospitals.
There is a problem of insufficient funds to finance all the government expenditure since
policy makers face problems in allocating insufficient funds to ensure that all government
obligations are financed.
Public expenditure is often faced with a problem of embezzlement and mismanagement
hence failure to meet the desired government goals
There is a problem of abrupt expenditure by the government due to disasters so that the
government actual expenditure exceeds the anticipated expenditure.
Thereafter, public expenditure is financed by the following public revenue: taxation, fees, rates,
grants, gift, markets dues, fines and penalties, gifts, license fees and public borrowings,
profits from government parastatals (companies), compulsory savings and sale of
government assets and so on but our concern among these sources of revenue is taxation and
public debts as explained in details follow;