Tamilnadu Samacheer Kalvi 12th Economics Notes Chapter 9 Fiscal Economics Notes
→ The science of public finance deals with the revenue and expenditure of the Centre, state and local Government.
→ In modem times, this subject includes five major divisions: Public revenue, public expenditure, public debt, fiscal administration and Fiscal Policy.
→ Thus, public finance plays a vital role in both developed and underdeveloped economies.
→ In advanced or developed economies, this is a problem of economic instability due to either ‘lack of demand’ or ‘excess of demand’.
→ In under developed countries, fiscal policy is one of the instmments for achieving faster economic growth.
→ Fiscal Policy became popular after the Great Depression.
→ Governments intervention was emphasised by J.M. Keynes to get the economies out of the Depression.
→ There is close association between governments spending, private investment, interest rate, consumption and income growth.
→ Local Finance Progressive Tax Proportional Tax Quid pro quo Regressive Tax Tax
→ Budget: It is an annual financial statement which shows the income and expenditure of the Government
→ Deficit Budget:The gap between Government anticipated revenue and the targeted expenditure.
→ External public debt: A loan is taken from abroad or from an international organisation.
→ Federal Finance: The system of assigning the source of revenue to the Central as well as State Governments.
→ Fiscal Policy: Policy related with the revenue and expenditure process of the Government.
→ Internal public debt: A loan taken by the Government from the citizens or from different institutions with in the country.
→ Local Finance: Local finance refers to the finance of local bodies in India.
→ Progressive Tax: The rate of tax increases with the increase in tax base (income).
→ Proportional Tax: Tax is imposed at the same rate irrespective of tax base.
→ Quid pro quo: A favour or advantage granted in return for something.
→ Regressive Tax: High rate of tax is levied on the poor and low rate is levied to the rich
→ Tax: Compulsory payment paid by the citizens to the Government without any quid pro quo.