-Refer to Figure G

question 22

Multiple Choice

-Refer to Figure g.Lily's benefit function (dashed) is more concave than Millie's (dotted) in Figure g.Millie

• A) Is more risk averse than Lily
• B) Is less risk averse than Lily
• C) Has a larger risk premium than Lily
• D) Has a lower certainty equivalent than Lily

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Definitions:

Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, eroding purchasing power.

Hourly Wage

The rate of pay per hour for employment, used to calculate total earnings based on the number of hours worked.

Rates of Inflation

The percentage rate at which the general level of prices for goods and services is rising.

Pace

The speed or rate at which something happens, often used to measure progress or activity levels.