in this question we are going dig deeper into the taylor rule and it v

Question

In this question, we aregoing dig deeper into the Taylor Rule and it variants (modifications). Federal Reserve data from October 1, 2011: In this question, we are going dig deeper into the Taylor Rule and it variants (modifications). Federal Reserve data from October 1, 2011: Potential GDP growth y = 1.1% Actual GDP Growth y= 1.6% Inflation PCE (actual inflation) nA = 2.7% Effective Federal funds Rate = .07%%3! As Taylor assumed, we assume the equilibrium real rate of interest r = 2% and the optimal inflationrate, the target inflation rate r* is also equal to 2%. The standard (original) Taylor rule formula:ig TR=r + rA+0.5(n^-n"] + 0.5[yA-y'] Using the 'standard' Taylor rule from above and using the data provided, what is the federal fundsrate implied by the 'standard' Taylor Rule? O 6.04% O 2.04% 5.30% O 5.05%