The correct answer is option 'C': Stabilization.

Government plays a crucial role in maintaining stability within the economy. It aims to achieve stability in terms of employment, demand-supply, and inflation. This function is known as stabilization.

Stabilization refers to the actions taken by the government to stabilize the economy and prevent extreme fluctuations or crises. It involves using various fiscal and monetary policies to influence aggregate demand, control inflation, and maintain a stable level of employment.

Let's explore each aspect of stabilization in more detail:

1. Employment: The government strives to achieve full employment in the economy, where everyone who is willing and able to work has a job. It promotes job creation through policies such as infrastructure development, subsidies for industries, and skill development programs. By maintaining a stable level of employment, the government ensures a higher standard of living and reduces social and economic inequalities.

2. Demand-Supply Balance: The government aims to maintain a balance between demand and supply in the economy. It does this by implementing policies that stimulate aggregate demand during periods of low economic activity and control demand during periods of overheating. For example, during a recession, the government may increase government spending or lower taxes to stimulate demand. Conversely, during periods of high inflation, the government may implement contractionary fiscal and monetary policies to reduce demand and control prices.

3. Inflation Control: Inflation refers to the sustained increase in the general price level of goods and services in an economy over time. The government uses various measures to control inflation and prevent it from spiraling out of control. These measures include monetary policies such as adjusting interest rates, open market operations, and reserve requirements. Additionally, the government may implement supply-side policies to address structural factors that contribute to inflation, such as improving productivity and reducing production costs.

Overall, the stabilization function of the government is crucial in maintaining a stable and healthy economy. By balancing employment, demand-supply, and inflation, the government aims to ensure sustainable economic growth and improve the well-being of its citizens.

Distribution