Problem
A. Suppose that the current real federal funds rate in the economy is 2.0%, the current inflation rate is 1.0%, the Federal Reserve's target inflation rate is 2.0%, and the output gap is -2.0%. According to the Taylor Rule, how much should be the Federal Reserve's target federal funds rate? Show me how you solved it.
B. What are the goals of monetary policy? Which goal is the most important or the principal goal?