A newspaper article written by the associated press, Ask an Expert

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A newspaper article written by the Associated Press reported that the US economy was expecting a low rate of inflation. It said that “low inflation has a downside: 45 million recipients of Social Security and other benefits will see their checks go up by just 2.8 percent next year.”

a) Why does inflation affect the increase in Social Security and other benefits?

b) Is this effect the cost of inflation, as the article suggests? Why or why not?

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