सार्वजनिक क्षेत्रातील प्रमुख राजकोषीय कार्यांपैकी अर्थव्यवस्थेच्या स्थिरीकरणासाठी खालील कोणत्या साधनाचा वापर होतो ?

The correct answer is Option A (Expansion or contraction of taxes).

Key Points:
• Musgrave's Three Functions of Public Finance:
• Public finance theorist Richard Musgrave classified the fiscal role of the state into three core branches: Allocation, Distribution, and Stabilisation.
• The Stabilisation Function:
• Stabilisation aims to maintain full employment and stable prices by managing aggregate demand.
• Fiscal policy directly controls aggregate demand through the expansion or contraction of taxes and public spending. During inflation, taxes are increased/expanded to reduce disposable income; during recession, taxes are cut/contracted to stimulate spending.
• Changes in interest rates (Option 4) represent a monetary policy instrument handled by the central bank, not a fiscal instrument.
• Therefore, Option (1) is the correct fiscal stabilization instrument.
• Key Takeaway: Fiscal stabilization relies on expanding or contracting taxes and public expenditure to counter inflation or recession.