The use of a first-person narrator in a story typically serves various purposes depending on the context and the story itself. Based on the options provided, the most fitting choice would likely be:
C gives readers insight into the narrator's unstable state of mind.
First-person narration often offers a deep and personal perspective, allowing readers to experience the narrator's thoughts, emotions, and psychological state directly. This choice emphasizes the unique perspective and inner struggles of the narrator, which is a common effect of using this point of view.