Question: In Canada, the consensus estimate of the natural rate of unemployment was 4.5% in 1970 and 7% in 2005. A minority view has claimed that the change to 7% is beyond explanation and must be too high. A similar change has taken place in the United States over this period, but the consensus estimate of the natural rate of unemployment is closer to 5% today. What would be the result if the Bank of Canada (the central bank in Canada) and the Federal Reserve in the United States assumed that the natural rate was 7% when it really was closer to 5%?