Syllabus T. Y. B. A. Paper : IV advanced economic theory with effect from academic year 2010-11 in idol

14.1 INTRODUCTION 
 
14.1.1 Introduction to Public Economics: 
 
A. Public Finance
It is the study of the financial activities of governments and 
public authorities. It describes and analyzes the expenditures of 
government and the techniques used by governments to finance its 
expenditures. 
It interest in studying the institution and decision making 
process that help mold the observed behavior of people acting 
through government. 
It deals with the economic role of government as a response 
to market failures, its limitation in responding to such failures, the 
design and evaluation of expenditure and tax program, and short & 
long term consequences of the deficit in the economy. 
 
B. Government 
It refers to the individual who are responsible for running 
public institutions, local, provincial, national, office of the president, 
congress, senate, courts, etc who are ―elected‖ or are appointed by 
someone who is elected. The government has the ability to use 
compulsion in running state. 
C. Economic Role of Government 
1. Prints money 
2. Grants patient & issues copyright (intellectual property 
rights) to encourage innovation and creativity. 
3. Levy taxes 

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4. Run public service offices (post office, highways, 
transportation, social security, etc) 
D. Activities of the Government 
1. Subsidizing hospital 
2. Subsidizing education 
3. Social security system, medicare, anti-poverty programs. 
4. Collection of taxes 
5. Providing employment opportunities in government and in 
private sectors. 
6. Infrastructure program 
7. Provides legal structure to settle disputes 
8. Environmental regulation 
9. Safety regulation