ABSTRACT
The discipline of public finance describes and analyzes government services, subsidies, and welfare payments, and the methods by which the expenditures to these ends are covered through taxation, borrowing, foreign aid, and the creation of new money. A nation's public finance is thus distinguishable from its market finance. The government is engaging in market finance, and the discipline of public finance has little to say about this aspect of its activity. If only one of the price effects of a tax is the subject of study, instead of the entire bundle, it is sometimes possible to obtain a real-life answer even for a broad-based, substantial-rate tax while abstracting from the use made of the tax revenue, and all other price effects. Payments of social security benefits, assistance payments, and other expenditures not on goods and services must, on the contrary, be specified as to both amount and type.
