Question

Mention any three similarities between public finance and private finance.

Point out the similarities between public finance and private finance.

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

Answer 1

Similarities:
1. Rationality:

• Both public finance and private finance are based on rationality.
• Maximization of welfare and least cost factor combination underlie both.

2. Limit to borrowing:

• Both have to apply restraint with regard to borrowing.
• The Government also cannot live beyond its means.
• There is a limit to deficit financing by the state also.

3. Resource utilization:

• Both the private and public sectors have limited resources at their disposal.
• So both attempt to make optimum use of resources.

Answer 2

1. Both the government and individuals have limited resources.
2. Both public and private finance aim at the satisfaction of human wants.
3. Both Public and Private finance have government receipts and expenditures. However, both face the difficulty of adjusting their income and expenditure.
4. Both public and private finance require management to ensure proper administration and operation.