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Assume that the U.S. economy in a particular period is characterized by the following data:
Actual inflation rate: 4 percent per year
Target inflation rate: 2 percent per year
Equilibrium real interest rate: 3 percent per year
Output gap (percentage excess of output over potential output): 2 percent
From the above data, calculate the value of the federal funds rate that would be prescribed by the Taylor rule.
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