Use the followine formula for the Taylor rule to determine the tar gnt fedwait funies rate. target federal funds rate = natural rate of interest + current inflation + Whithution gap) + K(output gap) Where the current rate of inflation is 3 percent, the natural rate of interest is 2 percent, the target rate of inflation is 2 percent, and output is at its potential, the target federal funds rate is 5.5 percent. 3.5 percent. 10 percent. 2.5 percent