Suppose the economy is thought to be 1 percent below potential (i.e., the output gap is -1 percent), when potential output grows 4 percent per year. Suppose the Fed is following the Taylor rule, with an inflation rate of 4 percent over the past year. The equilibrium real fed funds rate is 3 percent and the weights on the output gap and inflation gap are 0.5 each. The federal funds rate is 8.5 percent. What is the inflation target?

	A.	0 percent
	B.	1 percent
	C.	2 percent
	D.	3 percent