The essence of finance and the financial system. The finance function. The state budget and its structure. State debt.

State regulation of economy has arisen not in one day. It is the result of a historical process of society, embracing a long period. However economic practice confirmed in 19th-20th that market mechanism is not free of shortages and contradictions, it can not provide the affective usage of scarce resources. Self-regulating market system makes the loss of social work, as producers work for not well known market, but the instability of prices, inflation, and crisis ravage a lot of producers.

Market mechanism, orientated for the maximization of profit isn’t able to solve all the economic and social problems: the protection of environment, the development of fundamental science, public health. Market mechanism is indifferent for the problem of social justice and equality, and it reduces the differentiation of profits, social exposure of people, arguments. The tendency of concentration of production and monopolies, which is so peculiar to the market, destroys free competition, which is needed for realization of regulating function of market.

The state regulation of economy represents the principle system of methods of legislative, executive and control characters. Among hierarchy goals there is one main goal. It includes such links of society developing as the providing of intensive economic grow, economic and social stability, strengthening of existing system, international conditions of the country. Exactly from this main goal all another goals go, and all of them are subdued to the main one.

The economic role of state concretizes in its’ functions. Here are several functions of state:

1. The providing of lawful basis and social climate, promoting the effective functioning of market economy, regulating of market economy with the help of market levels of influence on the behavior of subjects of market relations.

2. Ant monopolist politics and the support of competition.

3. The development of effective common conditions of reproduction

4. Realization of state property with the help of developing the industrialists’ activity in the state sector of economy.

5. The distribution of recourses, their rational redistribution among different spheres of industry, economy.

6. Stabilization of reproduction on macro-level with the help of regulation of economic dynamic by invest-structured policy, financial and tax control after the level of production, unemployment, inflation.

7. The securing of principle of equity, social guarantees with the help of redistribution of profits, realization of transfer payments.

8. The support of little and average business.

9. The organization of fiscal politics – the impressments of a part of profits of managing subjects in order to form a sate budget.

In the mechanism of government regulation of economy means (instruments) play an important role, that are divided into 2 groups: administrative (admissions, compulsions) and economic (budget, credit, price, and fee). All of them are used separately as well as together, especially during the state economy programming, usage of the means of the state sector. That’s why the principal meaning has the right choice of the forms, methods due to the aims and social- economic situation, objects and subjects, effectiveness of the implementation.

In the process of the economy regulation, the state should supply

1. minimization of the negative processes in the economy

2. law, financial and social ground for the effective economy functioning

3. Social defense of those social groups that need it.