In the previous year, Arendelle had an inflation rate of 1.5%, and output was below 0.7% of its long-run potential.

a) If the empire has an inflation target of 2%, what is the federal funds rate target using the Taylor rule?

b) If the actual federal funds rate was 1.25%, did the central bank meet the target rate set by the Taylor rule? If not, what policy should the central bank pursue to reach the target? Suppose that this year, Arendelle has an inflation rate of 1.8%, and output was 0.3% above its long-run potential.

c) If the empire has an inflation target of 2%, what is the federal funds rate target using the Taylor rule?

d) If the actual federal funds rate was 4.15%, did the central bank meet the target rate set by the Taylor rule? If not, what policy should the central bank pursue to reach the target?