Question

Give two points of similarities between public finance and private finance.

Answer 1

Similarities Between Public Finance And Private Finance

(1) Maximum Advantage. The objective of both is the same i.e. to secure the maximum satisfaction out of the expenditure. An individual aim at securing maximum utility out of his expenditure by following the various principles of economics, the government, in the same manner, likes to get the maximum social advantage out or its expenditure and follow the same principles of economics.

(2) Precedence of income. Income must precede the expenditure in both cases. In private finance, an individual cannot spend unless be earns something. Similarly, revenue has to be raised before the expenditure can be met.