Use the Fed rule-of-thumb to predict how the Fed would want to change the federal funds rate and the real interest rate targets for each of the following scenarios if its estimate of the neutral real interest rate is 2%.

a. A recession hits the economy, leading output to be 0.75% below potential output and inflation to fall to 1%.

b. An increase in consumer and business confidence pushes the economy to produce output at 2% above potential output, while inflation rises to 3.5%.