Question: If a central bank has a quadratic loss function and cares about the output gap and deviation from its inflation target, then on a graph

If a central bank has a quadratic loss function and cares about the output gap and deviation from its inflation target, then on a graph with output on the horizontal axis and inflation on the vertical axis, the central bank's indifference curves can be represented as

A.

a set of straight lines.

B.

a set of triangles.

C.

a set of concave curves.

D.

a set of ellipses.

E.

a set of convex curves.

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