The Medieval Economy

The economy in Medieval Total War is made up of Income and Expenses. 

The expenses are the cost of maintaining the current army in that province.  

The Income is made up by the addition of 

Trade itself is made up on a number of aspects.  These include the provinces tradable resources, trade buildings, ports and if a trade route via the sea has been setup.

All income is taxed, and tax rates are set on a province by province basis.  The default rate is normal, which yields a reasonable amount of cash without damaging the loyalty of the locals too much.