According to the Taylor Rule, If the Current Inflation Rate

Multiple Choice

According to the Taylor rule, if the current inflation rate is 3.2%, output is 1% above the full-employment level, and the central bank's announced inflation target is 2%, at what level should the central bank set the nominal interest rate?

A) 2) 2%
B) 3) 3%
C) 4) 4%
D) 5) 8%
E) 6) 3%