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Frequently Asked Questions

What are the theories of taxation in public economics?

Several theories of taxation exist in public economics. Governments at all levels national, regional, and local need to raise revenue from a variety of sources to finance public sector expenditures. The details of taxation are guided by two principles: who will benefit, and who can pay.

Who introduced his hypothesis with connecting to the public expenditure?

Adolf Wagner introduced his hypothesis with connecting to the public expenditure. His idea is also known as ‘Wagner’s Growth of Public Expenditure’. He published his book titled “Law of the Increase of State Activities”. In his hypothesis, he analyzes the relationship between public expenditure and growth of an economy.

What is the relationship between public expenditure and economic growth?

In short, higher public expenditure automatically increases the function of the state. This will gradually lead to higher economic growth. There are many reasons for increasing the trend of public expenditure like planning, modernization, higher social demand, industrial development etc.

What is Wagner’s growth of public expenditure hypothesis?

His idea is also known as ‘Wagner’s Growth of Public Expenditure’. He published his book titled “Law of the Increase of State Activities”. In his hypothesis, he analyzes the relationship between public expenditure and growth of an economy. It can be explained with the help of a diagram as showing below.


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