Chapter 1- Individual and Goverments
Definitions
Public Finance: is the field of economics that studies
governments activates and the alternative means of
financing government expenditures.
Governments: are organization formed to exercise authority
over the actions of persons who live together in a society
and to provide and finance essential services.
Political institutions: are rules and generally accepted
procedures that evolve for determining what government
does how governments outlays are financed.
The allocation between private and government resources
The government allocates its resources between private and
government goods.
Example:
1. Private organization uses resources in food, housing, cars
and clothing.
2. Government uses resources in national defence, public
schools, police.
Nonmarket rationing: prices and willingness to pay those prices
are not applicable to goods such as national defence.
The mixed economy markets:
Pure market economy: virtually all goods and services are
supplied by for profit private firms, supply and demand
determine price.
Definitions
Public Finance: is the field of economics that studies
governments activates and the alternative means of
financing government expenditures.
Governments: are organization formed to exercise authority
over the actions of persons who live together in a society
and to provide and finance essential services.
Political institutions: are rules and generally accepted
procedures that evolve for determining what government
does how governments outlays are financed.
The allocation between private and government resources
The government allocates its resources between private and
government goods.
Example:
1. Private organization uses resources in food, housing, cars
and clothing.
2. Government uses resources in national defence, public
schools, police.
Nonmarket rationing: prices and willingness to pay those prices
are not applicable to goods such as national defence.
The mixed economy markets:
Pure market economy: virtually all goods and services are
supplied by for profit private firms, supply and demand
determine price.
