Correct Answer: C
Explanation:
The sentence explains that the person spoken of is not miserly, since she is quite prepared to be generous. So for the sentence to make sense, the word filling the blank has to be something that is consistent with generosity and yet might, by those without a full understanding of her behavior, be mistaken for miserliness. The words “frugality” and “thrift” fulfill this requirement and yield two sentences that are alike in meaning, so that pair forms the correct answer. Neither “stinginess” nor “illiberality” makes sense in the sentence, since they are synonymous with “miserliness” and inconsistent with generosity. Other choices, such as “diffidence,” might perhaps make a sensible sentence if placed in the blank but do not form part of the correct answer since they have no companion word that would make a sentence of similar meaning.