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2. Suppose that people expect inflation to equal 3 percent, but in fact, inflation is less than 1 percent. Describe how this unexpected low level
2. Suppose that people expect inflation to equal 3 percent, but in fact, inflation is less than 1 percent. Describe how this unexpected low level of inflation makes the following better off, worse off or about the same as they would have been with the 3 percent inflation:
(a) A homeowner with a fixed-rate mortgage.
(b) A retiree living off her social security and pension.
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