Use the following formula for the Taylor rule target federal funds rate = natural rate of interest + current inflation + (inflation gap) +(output gap) to determine the change in the target federal funds rate for every one percent decrease in the rate of inflation. This will

raise the target federal funds rate by 1.5 percent.

lower the target federal funds rate by 0.5 percent.

lower the target federal funds rate by 1.5 percent.

raise the target federal funds rate by 0.5 percent.