2. If we look at social security benefit increases in between 1974 and 1982 in the US we know that before 1974, increases in social security benefits for recipients were random and varied wildly. In 1974, however, a law linked the SS payment increases to the increase in the CPI. Over the next eight years (which even continues to today), the increase in SS benefits were announced about two and a half months before the effect took place. How this policy affected consumption under these circumstances:

2.a) The recipients of the SS benefits did not have much access to the financial markets.

2.b) The beneficiaries are individuals that take their consumption decisions based on adaptive expectations, following Friedman's theory.

2.c) What about if the individuals based their decisions on rational expectations?