38. Suppose Firm A can manufacture 100 pens and 20 umbrellas with a unit of labor, and Firm B can manufacture 80 pens and 10 umbrellas with a unit of labor. Which one of the following statements is true?

A. Firm A has the comparative advantage in both pen and umbrella production. B. Firm B has an absolute advantage in umbrella production. C. Firm A has a comparative advantage only in pen production. D. Firm B has a comparative advantage in pen production. E. Neither firm has a comparative advantage in either pen or umbrella production.

40. Which of the following represents a credit on the current account (CA) of country A?

A. Citizens of country A travel to neighboring country B. B. Country A imports furniture from country C. C. Country A's citizens buy government bonds from country F. D. A firm in country A builds a new factory in country G. E. Country A exports computers to firms in country H.

41. Which of the following is considered an automatic stabilizer?

A. A discretionary increase in government spending B. A decrease in the wage rate when there is cyclical unemployment C. An increase in income tax rates to fight inflation D. Unemployed workers collect unemployment insurance benefits when they become unemployed E. A simultaneous increase in government spending and taxes to fight unemployment with a balanced budget

42. In a closed economy, national savings can be defined as the sum of

A. household savings, corporate savings, and government or public fiscal surplus B. household savings, business investment, and government deficits C. household borrowings, corporate savings, and public borrowing D. household borrowings, private investment, and government spending E. household expenditures, private investment, and government spending