If We Have a Loss Function That Is More Heavily

Multiple Choice

If we have a loss function that is more heavily weighted against high unemployment than against deviations from an inflation target, then

A) a recession will result if the targeted rate of inflation is below the expected inflation rate
B) there is an inherent incentive to raise inflation in order to lower unemployment
C) there is no good incentive to actually stick to the inflation target
D) real GDP targeting is preferable to nominal GDP targeting
E) all of the above