An equation that summarizes the total cost to the economy when output differs from potential and inflation rate differs from the ideal inflation rate is referred to as the

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The Fed's objective function is an equation that summarizes the total cost to the economy when output differs from potential and the inflation rate differs from the ideal inflation rate. This equation is used by the Federal Reserve in its monetary policy decision-making process. It helps the Fed to balance the trade-off between inflation and unemployment, and to aim for both price stability and maximum employment. The other options are not relevant to this concept.

An Equation That Summarizes the Total Cost to the Economy