The central bank's policy goals can be represented by

Question

Quizplus · Accepted Answer

A loss function is a mathematical expression that represents the central bank's policy goals, including both inflation and output stability. The central bank strives to minimize this function by adjusting its policy instrument, such as interest rates or monetary base, to achieve its goals. The other choices do not accurately represent the central bank's policy goals. The Phillips curve relates unemployment and inflation, the output demand and supply curves relate output and prices, and a vertical line does not represent any economic concept.

The Central Bank's Policy Goals Can Be Represented by