Monetary policy is concerned with the changes in the money supply of money, credit, lending rates, and interest rates. It is administered by the central bank. Monetary policy is the process by which the monetary authority of a country controls the supply of money, and targeting an inflation rate or interest rate to ensure price stability and general trust in the currency.
The study of public finance relates to the financial activities of the government including the financial activities of central govt., state govt. and local govt.
Fiscal Operation: The scope of public finance includes fiscal operations and its objectives. Fiscal operation means raising public revenue, spending to achieve certain goals, and financial administration. For such operations, the government uses fiscal tools like taxation, public expenditure, and public debt. The following are the objective of Fiscal operation
|Points of difference||Public finance||Private finance|
|Meaning||Public finance is a branch of economics that deals with the expenses and revenues from the government to the government in the economy.||It basically deals with the optimization of finances at the individual (single consumer, family, personal savings, etc.) level subjected to the budget constraint.|
|Objectives/ Motive||To offer a maximum social advantage to society||To fulfill private interests|
|Source of revenue||In the case of governments, the sources of income are taxes and non-tax revenues. In the case of taxes, fees, fines, fines there is an element of compulsion||Private economic units earn their income by using assets owned by them. Their sources of income are salaries, wages, interest, rent, and profits which arise out of transactions|
|Sources of borrowing:||Public bodies can borrow almost on a continuous basis from internal and external sources. They can borrow from the people, the central bank, Commercial banks, and other financial institutions as well from external sources||Private economic units may borrow from informal sources like friends, relatives, moneylenders as well as from formal sources like banks and financial institutions.|
|Determination of expenditure||The government first determines the volume and different ways of its expenditure||An individual considers his income and then determines the volume of expenditure|
|Credit status||The high degree of credibility in the market||The credit of a private individual is limited|
|Right to print currency||The Government can print notes through the Reserve Bank of India||The private individual does not enjoy such right|
|Assessment of outcomes||In the case of public finance, the outcome has to measure and evaluated in terms of multiple parameters. These are social welfare, economic growth, security, productivity, and efficiency.||It is much easier to measure and evaluate the outcome of private financial activities than the outcome of public financial activities.|
|Effect on the economy||Tremendous impact on the economy of the country||Marginal effect on the national economy|
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Reference: ML Jhingan, Manan Prakashan