The modern market economy is the result of centuries of evolution. It consists of tools that power the entire economic mechanism. The most basic and most important instruments are the market, government regulation and finance.
Instructions
Step 1
It is customary to understand finance as a set of economic relations associated with the formation, distribution and use of funds of funds. This term is the most complete, reflects the entire nature of finance and is often found in the economic literature.
Step 2
Funds of funds are divided into centralized and decentralized. The former are created by redistributing state revenues. These funds include the state budget and state off-budget funds. Decentralized funds are formed by the accumulation of contributions from various organizations and households. It is in this fund that most of the country's financial resources are formed.
Step 3
Financial funds are formed over the years as a result of the distribution and redistribution of savings and deductions. They are intended to support the state apparatus, to spend on state needs and to meet part of the needs of the population.
Step 4
Finance can be considered in most detail through the prism of its functions. There are only four of them: distribution, stabilizing, regulating and control.
Step 5
The first function reflects finance as a tool for the distribution and redistribution of the entire gross domestic income of the country. Thanks to this, cash contributions form funds not in a chaotic manner, but evenly, depending on their need for replenishment of the balance sheet.
Step 6
The stabilizing function is to ensure the stability of economic and social conditions in the field of finance. This function is intended to support the population sector. Designed to help him adapt to the financial situation in the country.
Step 7
The next function ensures the dominance of the public sector. This sector influences the economy through tax policy, thereby regulating the reproduction process.
Step 8
The latter has a targeted character. It is designed to monitor how federal funds are spent.
Step 9
Conventionally, three groups of finance can be distinguished that affect the economic system. These are the finances of business entities or personal finances, the income of which consists of personal earnings, accrued pension, profits from deposits in banks and securities, profits from renting property, and others. The finances of enterprises, which include income from their main activities, non-sales activities, from the provision of leases, both for real estate and for property. And public finance. They consist of taxes and fees, a government loan, which reflects the total amount of government debt to the population, and gratuitous contributions.
