Business Ethics Chapter 11 Test Questions

1. The level of government regulation of business has always been low. a. True b. False

False

10. The monetary policy set the Federal Reserve System is completely independent of the influence of other branches of government. a. True b. False

False

14. Negative externalities are the additional costs incurred by business due to the outside regulations placed by government. a. True b. False

False

17. The new social regulation focuses on business's impacts on other businesses. a. True b. False

False

19. Deregulation has provided uniform benefits for all parties affected. a. True b. False

False

3. Our goals for business focus solely on the production and distribution of goods and services. a. True b. False

False

4. The relationship between government and business has become adversarial, but is improving. a. True b. False

False

5. The relationship between government and business is limited to government's influence over business. a. True b. False

False

6. Proponents of privatization want government to be a producer of services. a. True b. False

False

8. One of the most direct ways in which government influences business is through transfer payments. a. True b. False

False

9. When providing loan guarantees for business, the government actually transfers the money to the business. a. True b. False

False

11. In many ways the most controversial aspect of the government/business relationship is regulation. a. True b. False

True

12. Government regulation generally arises out of some type of market failure. a. True b. False

True

13. Many government regulations over business have been created by the efforts of special interest groups. a. True b. False

True

15. Keeping people informed is an important social goal of government. a. True b. False

True

16. Early economic regulations and the government bodies that administered them were usually formed along industry lines. a. True b. False

True

18. Newer social regulations covers business practices in all industries. a. True b. False

True

2. Regulating the way business operates is only one of several roles the government has in its relationship with business. a. True b. False

True

20. One of the recurring problems in industries that have been deregulated is that they tend to become dominated by a few firms. a. True b. False

True

7. Advocates of privatization base their positions on the need for efficiency and overall performance. a. True b. False

True

24. Most Congressional legislation before the 1950s that affected business was a. economic in nature. b. social regulation. c. aimed at protecting individuals' rights. d. to protect consumers' privacy.

a

31. Which of the following is not a method that government uses to influence business? a. lobbying b. taxation c. regulation d. industrial policy

a

46. The act of governing or bringing under the control of law or constituted authority is called a. regulation. b. despotism. c. central planning. d. dictatorship.

a

49. A market in which the economies of scale are so great that the largest firm has the lowest costs and is able to drive out competitors is called a(n) a. natural monopoly. b. market failure. c. externality. d. deregulated industry.

a

53. Governmental regulations that seek to further societal objectives are examples of a. social regulation. b. economic regulation. c. environmental control. d. central planning.

a

21. Government intervention in business began with a. opening of settlements. b. a push for tariffs. c. governments giving of land grants. d. the creation of the Interstate Commerce Commission.

b

25. After the 1950s, most Congressional legislation that affected business was a. economic in nature. b. concerned largely with the quality of life. c. supportive of business. d. aimed at promoting competition.

b

29. Government is generally thought to follow the ethic of a. deontology. b. collectivism. c. individualism. d. socialism.

b

34. The question of whether current public functions should be performed by the government or private sector is addressed by a. industrial policy. b. privatization. c. central planning. d. moral suasion.

b

36. Arguments against industrial policy include all of the following except a. reduces market efficiency b. The need to rescue "sunset" industries. c. the need to promote "sunrise" industries. d. foreign industrial policy success has been variable.

b

38. Industrial policy is: a. by default. b. a powerful nonregulating approach by government to influence business. c. non debatable. d. consistent in each government administration.

b

39. There has always been a strong reaction in the United States to any form of industrial policy because: a. It reduces the market's efficiency. b. It conflicts with the widely held view of government's role in the economy. c. Existing attempts to form industrial policies have generally been irrational and uncoordinated. d. Industrial policies violate anti-trust legislation.

b

42. Government payments to industries or groups with special qualifications are called a. transfer payments. b. subsidies. c. loan guarantees. d. moral suasion.

b

43. Government attempts to persuade business to act in the public interest are called a. monetary policies. b. moral suasion. c. standard setting. d. transfer payments.

b

44. All of the following are reasons that government regulation of business is needed except a. to ensure that customers and employees are treated fairly. b. maintain competitive markets. c. to protect the environment. d. to ensure that customers and employees are not exposed to unreasonable hazards.

b

51. Negative externalities are often referred to as a. full absorption costs. b. social costs. c. allocated costs. d. environmental costs.

b

56. Direct costs of regulation are most visible when we look at the number of new agencies created, aggregate expenditures, and a. global influence. b. growth patterns. c. community response. d. resource spending.

b

58. The primary purpose of deregulation is to a. decrease competition in the affected industries. b. remove certain industries from old-line economic regulations. c. protect the natural environment. d. allow natural monopolies to form.

b

59. The dilemma of deregulation is a. to enhance competition within the industry without harming workers' status. b. to enhance competition within the industry without sacrificing applicable social regulations. c. to prevent monopolies without allowing hypercompetition. d. to provide business more freedom without completely abandoning governmental authority.

b

64. Arguments against privatization include all of these except: a. social goals. b. service provisions. c. public backlash. d. safety concerns.

b

65. Which of the following is not an effect of induced costs? a. small businesses may be adversely affected. b. new agencies may be created. c. new investments in plant and equipment may be affected. d. innovation may be affected.

b

22. The reason that the United States government passed anti-trust legislation was a. to conform to Adam Smith's economic theory from Wealth of Nations. b. due to lobbying efforts by private citizens' groups. c. due to the anti-competitive practices of some large trusts. d. to restrict competition.

c

26. Modern goals for business include all of the following except a. safe working environments. b. fair pay. c. promoting the social welfare. d. equal employment opportunities.

c

27. The clash of ethical systems between government and business is centered around a. growth and sustainability. b. economic goals and social welfare. c. individualist and collectivist ethics. d. privatization and federalization.

c

28. Business generally follows the ethic of a. deontology. b. collectivism. c. individualism. d. socialism.

c

33. Every form of state intervention that affects industry as a distinct part of the economy is called a. internationalization. b. globalization. c. industrial policy. d. privatization.

c

41. Government influences business through all of the following nonregulatory methods except a. being a major employer. b. being a standard setter. c. requiring equal employment opportunities be granted to job applicants. d. providing transfer payments.

c

47. The primary reason for government regulation of business is a. hypercompetition. b. central planning of the economy. c. market failure. d. lobbying efforts by business.

c

50. Government intervention in monopolistic industries is often brought about by a. requests from smaller competitors. b. class-action lawsuits. c. anticompetitive practices. d. frequent bankruptcies within the industries.

c

52. Government regulation of business through the control of economic or market variables is a form of a. negative externality. b. social cost. c. economic regulation. d. indirect cost.

c

55. A 2015 Pew research survey found over 50% of respondents thought that the federal government was doing well in all areas except a. responding to national disasters. b. ensuring safe food and medicine. c. corporate bailouts. d. ensuring access to education.

c

60. Which of the following industries has not been affected by deregulation? a. financial services. b. trucking c. computer software d. airline

c

61. Which of the following is not a role increasing government's complex relationship with business? a. government is a major purchaser. b. government can elevate some businesses while devaluing others. c. government cannot have buying power d. government can create new businesses through subsidization.

c

23. Government's new role in its relationship with business during the New Deal era was one of a. partner. b. servant. c. master. d. restoring prosperity and promoting economic growth.

d

30. When it comes to the government business relationship, the public thinks: a. the government is doing too much. b. the government is doing too little. c. the government needs to adapt to new realities. d. All of these.

d

32. The public and government use all of the following methods of influencing each other except a. politicking. b. voting. c. forming special-interest groups. d. coercion.

d

35. Arguments for industrial policy include all of the following except a. for economic reform. b. making government more efficient. c. making government more effective. d. stifling innovation.

d

37. A strong industrial policy: a. is present in most developing countries. b. is a term heard continuously. c. is government intervention. d. helps firms compete in a fast-moving global economy.

d

40. The opposite of privatization could be considered a. creeping expropriation. b. industrial policy. c. subsidization. d. federalization.

d

45. Government regulations have been criticized for all the following reasons except a. being too extensive. b. being too costly. c. being burdensome to business. d. being ineffective.

d

48. Which of the following is not a major reason given for governmental regulation? a. controlling natural monopolies b. controlling negative externalities c. achieving social goals d. maintaining a trade surplus with foreign countries

d

54. Social regulation's focus on people encompasses their roles as all of the following except a. employees. b. consumers. c. citizens. d. business owners.

d

57. Which of the following is not considered a part of the induced costs of regulation? a. the effect on innovation b. the effect on investments in plant and equipment c. the effect on small business d. the effect on consumers

d

62. A 2015 Pew research survey found that respondents think the government is doing well on many issues except a. setting workplace standards. b. protecting the environment. c. keeping us safe from terrorists. d. cutting corporate taxes.

d

63. The newer form of industrial policy is exemplified by: a. a focus on enabling industrialization. b. Karl Aiginer's book, "Industrial Policy: A Dying Breed or a Re-emerging Phoenix?" c. policy that does not conflict with widely held view on the role of government in the economy. d. Robert Reich's book, "The Next American Frontier."

d