Current inflation: 4% Fed's inflation target: 2% Deviation of aggregate output from potential output: (+) 3% Answer the following questions by utilizing the information above: 1. Given the information provided, what should the Federal Funds Rate be according to the Taylor Rule (Submit an image of your calculations into the textbox below for full credit. Please make sure that your image is NOT an HEIC or HEIF file. You should upload your image as a JPEG file or PNG file.) 2. Given that current inflation is greater than the Fed's target rate of inflation, does the Taylor Rule state that the Federal Funds Rate should be lowered or raised when calculating the appropriate Federal Funds Rate according to the Taylor Rule? Using economic logic, explain why the Taylor Rule is stating that the Federal Funds rate needs to be lowered or raised when calculating the appropriate Federal Funds Rate according to the Taylor Rule. (Provide at least 1 paragraph for full credit.) 3. Given that the deviation of aggregate output from potential output is (+) 3%, does the Taylor Rule state that the Federal Funds rate needs to be lowered or raised when calculating the appropriate Federal Funds Rate according to the Taylor Rule? Using economic logic, explain why the Taylor Rule is stating that the Federal Funds rate needs to be lowered or raised when calculating the appropriate Federal Funds Rate according to the Taylor Rule. (Provide at least 1 paragraph for full credit.) 4. Suppose that the current Federal Funds Rate is 2%. Given your answer to question 1, should the Fed purchase or sell assets? Explain and detail how this will impact the Federal Funds Rate. (Provide at least 1 paragraph for full credit.)