Suppose the economy is thought to be 5 percent below potential (i.e., the output gap is -5 percent), when potential output grows 3 percent per year. Suppose the Fed is following the Taylor rule, with an inflation rate of 6 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 inflation target is 1 percent. What should the federal funds rate be?

A.		4 percent
B.		6 percent
C.		8 percent
D.		9 percent