The new chairman of the Ionian Central Bank (ICB) is preparing for her first board meeting. She is expected to recommend a monetary policy for the board to pursue. She decides to use the Taylor rule, which was originally developed for the U.S. Federal Reserve. Ionia's potential GDP is 100 million drachma, but current GDP is 101 million. What is Ionia's output gap? Ionia's output gap: Inflation is running at 1%, but the chairman considers an inflation rate of 2% to be a reasonable goal. What is Ionia's inflation gap? The Taylor rule helps the chairman to determine the target inflation rate, fed funds rate. discount rate: Calculate this target rate for Ionia, according to the Taylor rule. target The current rate is 4%, 50 the chairman recommends selling securities. buyinig securitiek