Someone Who Is Risk-Averse Has

question 107

Multiple Choice

Someone who is risk-averse has

• A)diminishing marginal utility of wealth.
• B)constant marginal utility of wealth.
• C)increasing marginal utility of wealth.
• D)less marginal utility of wealth than someone who is risk-neutral.

---

Definitions:

Inflation Rate

The percentage increase in the general level of prices for goods and services in an economy over a period, typically measured annually.

Favorable Supply Shock

A condition where the supply of goods increases, leading to a decrease in prices and an increase in overall economic welfare.

Phillips Curve

An economic concept suggesting an inverse relationship between rates of unemployment and corresponding rates of inflation in an economy over time.

Natural Rate

Natural Rate usually refers to the natural rate of unemployment, which is the level of unemployment consistent with a stable inflation rate, not affected by short-term cyclical or temporary factors.