The following table shows two monetary policy rules.

Inflation	Policy Rule 1 Targeet Overnight Rate	Policy Rule 2 Target Overnight Rate
0	1	3
2	3	5
4	5	7
6	7	9
8	9	11

a. Graph the two policy rules.

Suppose the Bank of Canada shifts from policy rule 1 to policy rule 2.

b. For any given rate of inflation, what happens to the interest rate because of this change in policy? What happens to the real rate of interest?

c. How does this policy change affect the Z-line?

d. How does this policy change affect the AD curve?

e. Do either of the two policy rules adhere to the Taylor Principle? Explain.