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Lesson Plan: Components of Public Finance Economics

This lesson plan includes the objectives, prerequisites, and exclusions of the lesson teaching students how to identify the public (or government) expenditure, revenue, and budget as components of public finance.

Objectives

Students will be able to

  • understand the main classifications of public finance, which are public expenditures, public revenues, and the public budget,
  • understand the role of political democracy in regard to public finance,
  • understand the definition and characteristics of public expenditure,
  • understand sources of public revenue, such as state-owned enterprises, public debt, fees, and taxes,
  • understand the following canons of taxation: equity, economy, certainty, and convenience,
  • distinguish between different types of taxes: head versus income taxes, proportional versus progressive taxes, and direct versus indirect taxes,
  • understand the definition and characteristics of the public budget and the process of creating and approving the budget,
  • understand the following principles of the public budget: annuality, unity, universality, and budget balance.

Prerequisites

Students should already be familiar with

  • market failure,
  • the role of the government.

Exclusions

Students will not cover

  • regressive taxes,
  • fiscal and monetary policy,
  • calculating taxes by explicit formulas,
  • marginal and average tax rates.

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