Mathematically, the Utility Function for Risk Adverse Individuals Is Said

question 56

Multiple Choice

Mathematically, the utility function for risk adverse individuals is said to be ____ and/or ____.

• A) decreasing , linear
• B) decreasing , convex
• C) increasing , linear
• D) increasing , concave
• E) increasing , decreasing

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Definitions:

Nominal Interest Rate

The interest rate as stated without adjustment for inflation, representing the face value of financial transactions.

Real Interest Rate

This rate adjusts the nominal interest rate to remove the effects of inflation, providing a more accurate measure of the true cost of borrowing or the true return on investment.

Redistribution

The transfer of income, wealth, or resources from certain individuals or groups to others by means of a social mechanism such as taxation, charity, welfare, or public services.

Unexpectedly High

A term describing something that surpasses anticipated levels or estimates, often leading to surprise or a need for adjustment.