Suppose that the actual inflation rate is 7 percent a year and that the economy is at the natural unemployment rate. If the Bank of Canada announces that it is going to lower the inflation rate and people believe this announcement (the decline in the inflation rate is not a surprise), what happens to the unemployment rate? Suppose that people believe the Bank of Canada’s announcement and that the expected inflation rate falls, but then the Bank of Canada keeps the inflation rate at 7 percent a year. Now what happens to the unemployment rate?