Matt's Utility Function If Matt's Current Wealth Is $51,000,then

question 43

Multiple Choice

Matt's Utility Function

If Matt's current wealth is $51,000,then

• A)his gain in utility from gaining $1,000 is greater than his loss in utility from losing $1,000.Matt is risk averse.
• B)his gain in utility from gaining $1,000 is greater than his loss in utility from losing $1,000.Matt is not risk averse.
• C)his gain in utility from gaining $1,000 is less than his loss in utility from losing $1,000.Matt is risk averse.
• D)his gain in utility from gaining $1,000 is less than his loss in utility from losing $1,000.Matt is not risk averse.

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Definitions:

Consumer Price Index

An index that measures the average change over time in the prices paid by consumers for a market basket of consumer goods and services.

Money Demand

The desire to hold cash or easily liquidated assets based on the trade-off between the liquidity they provide and the interest foregone by not investing.

Inflation

The speed at which the overall price level of goods and services increases, leading to a decline in the currency's buying power.

Relative Prices

The price of one good or service compared to another, often used to analyze choices and preferences in consumer behavior.