Public Finance Theory

Public Finance Theory studies how governments manage their financial resources and make decisions about revenue and expenditure. It examines how taxes are collected, how public services are funded, and the impact of these decisions on the economy and society. The theory also looks at the balance between efficiency (maximizing resources) and equity (fair distribution of wealth). By analyzing government budgets, it helps explain the effects of fiscal policies on growth, stability, and welfare, ultimately guiding policymakers in making informed choices that benefit the public.