The word "pale" has different meanings depending on its usage.
• Sentence I: Correct. "Pale" refers to someone's face losing colour, often due to illness or fatigue.
• Sentence II: Correct. The phrase "pale in comparison" is an idiomatic expression meaning something appears less impressive when compared to another.
• Sentence III: Incorrect. "Paled" is not used correctly here. "Pale" means lacking colour or intensity, but using it to describe bright and vibrant colours contradicts its meaning. The correct phrasing should be something like "The artist lightened the canvas" instead.
Since only sentences I and II are correct, the correct answer is option (d).