What is the difference between Public Finance and Private Finance? - ProProfs Discuss
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What is the difference between Public Finance and Private Finance?

Asked by C. Gray, Last updated: Apr 12, 2022

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Charlie Rogers

Charlie Rogers

Management is the key to success

Charlie Rogers
Charlie Rogers, Manager, Bachelor of Management Studies (BMS), Lexington, Kentucky

Answered May 19, 2020

Foremost, the public sector consists of all organizations that are owned by the government, all state offices, and agencies. On the other hand, the private sector consists of all the privately-owned partnerships, companies, businesses, and profit and nonprofit organizations. In public finance, the government first draw out the expenditure budget, then adjust income accordingly.

Whereas in private finance, the individuals involved in the private sector first draw out the income made or probably their future estimate, too, then they make adjustments on their expenditure. The government can also borrow from itself, while an individual in the private finance sector cannot. In public finance, the government is the one in charge of creating, distributing, and monitoring currency, while the private sector has no right to create any form of currency.

The financial aspect of the public sector is targeted at creating social benefits in the economy. Contrarily, the private sectors seek personal profit or benefits.

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