Public Finance

Public Finance, field of economics concerned with how governments raise money, how that money is spent, and the effects of these activities on the economy and on society. Public finance studies how governments at all levels—national, state, and local—provide the public with desired services and how they secure the financial resources to pay for these services.
In many industrialized countries, spending and taxation by the government form a large portion of the nation's total economic activity. For example, total government spending in the United States equals about 40 percent of the nation's gross domestic product—that is, the value of all the goods and services produced within the United States in one year (see Gross National Product).

Contributed By:Robert H. Haveman
Source : Microsoft ® Encarta ® 2006.