MAINTAIN ECONOMIC STABLILITY

Economic stability refers to stable price structure, desired amount of saving and investment absence of stock and shortage of goods. These are necessary conditions for rapid and sustainable economic development of a national. Frequent change in trade, commerce and industry discourages entrepreneurs to invest in produce any types of goods and services. It also discourages foreign capital investment in the country. In order to maintain economic stability, a government adopts concretionary fiscal policy. the policy that increases tax rates and other duties to discourage more productions. During the period of over-production and expansionary fiscal policy. The policy that reduces tax rates and removes those duties to encourage more productions. During the period of underproduction. Therefore public finance is the first and most effective tool to control fluctuations in the economic activity of the country.