Question: L = (yt ye) + (t T )2 (13.1) Consult Chapter 13 to answer the following questions: (a) What can we interpret about the central

L = (yt ye) + (t T )2 (13.1) Consult Chapter 13 to answer the following questions: (a) What can we interpret about the central banks preferences from this loss function? (b) Briefly explain how this loss function compares to the standard loss function and a loss function with yT > ye. (c) Find the inflation bias for a central bank with this loss function

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