Deck 11: Business, Go,crnmcnl, and Rcgulation

Question 1

Proponents of privatization want goverrnnent to be a producer of services.

Answer 1

False

Question 2

The new social regulation focuses on business's impacts on other businesses.

Answer 2

False

Question 3

The level of government regulation of business has always been low.

Answer 3

False

Question 4

Regulating the way business operates is only one of several roles the government has in its relationship with business.

Question 5

Advocates of privatization base their positions on the need for efficiency and overall performance.

Question 6

Government regulation generally arises out of some type of market failure.

Question 7

The relationship between goverrnnent and business is limited to government's influence over business.

Question 8

Early economic regulations and the goverrnnent bodies that administered them were usually formed along industry lines.

Question 9

The monetary policy set the Federal Reserve System is completely independent of the influence of other branches of goverrnnent.

Question 10

Many government regulations over business have been created by the efforts of special interest groups.

Question 11

Negative externalities are the additional costs incurred by business due to the outside regulations placed by goverrunent.

Question 12

One of the recurring problems in industries that have been deregulated is that they tend to become dominated by a few finns.

Question 13

When providing loan guarantees for business,the goverrnnent actually transfers the money to the business.

Question 14

One of the most direct ways in which government influences business is through transfer payments.

Question 15

Newer social regulations covers business practices in all industries.

Question 16

In many ways the most controversial aspect of the government/business relationship is regulation.

Question 17

Our goals for business focus solely on the production and distribution of goods and services.

Question 18

Deregulation has provided uniform benefits for all parties affected.

Question 19

Keeping people informed is an important social goal of goverrunent.

Question 20

The relationship between government and business has become adversarial,but is improving.

Question 21

Business generally follows the ethic of

A)deontology.
B)collectivism.
C)individualism.
D)socialism.

Question 22

Government is generally thought to follow the ethic of

A)deontology.
B)collectivism.
C)individualism.
D)socialism.

Question 23

The public and goverrunent use all of the following methods of influencing each other except

A)politicking.
B)voting.
C)forming special-interest groups.
D)coercion.

Question 24

Arguments for industrial policy include all of the following except

A)for economic reform.
B)making government more efficient.
C)making goverrnnent more effective.
D)stifling innovation.

Question 25

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.

Question 26

Government intervention in business began with

A)opening of settlements.
B)a push for tariffs.
C)governments giving ofland grants.
D)the creation of the Interstate Commerce Commission.

Question 27

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.

Question 28

Which of the following is not mentioned as a frustration executives have with government officials,according to a recent McKinsey survey?

A)Concerns that regulators do not understand the economics of their industry
B)Concerned that government often blames business for society's problems
C)Difficulty in determining the best way to work with government
D)Concerned that government aims to redistribute the balance of wealth

Question 29

After the 1950s,most Congressional legislation that affected business was

A)economic in nature.
B)concerned largely with the quality oflife.
C)supportive of business.
D)aimed at promoting competition.

Question 30

Which of the following is not a method that government uses to influence business?

A)lobbying
B)taxation
C)regulation
D)industrial policy

Question 31

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.

Question 32

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 goverrnnent'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.

Question 33

The opposite of privatization could be considered

A)creeping expropriation.
B)industrial policy.
C)subsidization.
D)federalization.

Question 34

The question of whether current public functions should be performed by the goverrnnent or private sector is addressed by

A)industrial policy.
B)privatization.
C)central planning.
D)moral suasion.

Question 35

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.

Question 36

A strong industrial policy:

A)is present in most developing countries.
B)is a term heard continuously.
C)is goverrnnent intervention.
D)helps frrms compete in a fast-moving global economy.

Question 37

Modem 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.

Question 38

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.

Question 39

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.

Question 40

Industrial policy is:

A)by default.
B)a powerful nonregulating approach by goverrunent to influence business.
C)non debatable.
D)consistent in each goverrunent administration.

Question 41

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 envirornnent.
D)to ensure that customers and employees are not exposed to unreasonable hazards.

Question 42

Governmental regulations that seek to further societal objectives are examples of

A)social regulation.
B)economic regulation.
C)envirornnental control.
D)central planning.

Question 43

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 goverrnnental authority.

Question 44

Social regulation's focus on people encompasses their roles as all of the following except

A)employees.
B)consumers.
C)citizens.
D)business owners.

Question 45

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 envirornnent.
D)allow natural monopolies to form.

Question 46

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.

Question 47

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.

Question 48

The dilemma of regulation is the tradeoff between

A)cost and efficiency.
B)effective control and the burden placed on firms.
C)private gain and public good.
D)individualistic and collectivistic goals.

Question 49

Negative externalities are often referred to as

A)full absorption costs.
B)social costs.
C)allocated costs.
D)envirornnental costs.

Question 50

The newest type of social regulations is concerned primarily with

A)envirornnental protection.
B)corporate welfare.
C)security.
D)educational reform.

Question 51

Goverrnnent 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.

Question 52

Goverrnnent payments to industries or groups with special qualifications are called

A)transfer payments.
B)subsidies.
C)loan guarantees.
D)moral suasion.

Question 53

Which of the following industries has not been affected by deregulation?

A)fmancial services.
B)trucking
C)computer software
D)airline

Question 54

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

Question 55

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.

Question 56

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.

Question 57

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.

Question 58

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.

Question 59

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

Question 60

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.

Question 61

Arguments against privatization include all of these except:

A)social goals.
B)service provisions.
C)public backlash.
D)safety concerns.

Question 62

Distinguish between producing a service and providing a service.Why is this distinction important in the debate over privatization?

Question 63

Why does government regulate business?

Question 64

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.

Question 65

Who determines the public interest?

Question 66

Is privatization always effective or successful? Give examples of a success and a failure.

Question 67

Discuss the reasons for the overlapping trends of regulation and deregulation.

Question 68

Compare and contrast economic regulation and social regulation.

Question 69

Industrial policy sometimes allows,or requires,government fmancial assistance to certain industries (e.g. ,the airline industry or the railroad industry).In addition to industry-wide assistance,the goverrnnent has on occasion provided
bailouts for individual fmns.Is bailing out a specific company an appropriate use of goverrnnent regulation?

Question 70

Which of the following is not a role increasing goverrnnent's complex relationship with business?

A)government is a major purchaser.
B)goverrnnent can elevate some businesses while devaluing others.
C)goverrnnent cannot have buying power
D)goverrnnent can create new businesses through subsidization.

Question 71

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,"American Frontier."

Question 72

Which of the following is not a concern expressed by executives about government involvement in business?

A)it is difficult to determine the best way to work productively with government.
B)regulators and policy makers do not understand the economics of their industry
C)government blames business for society's problems
D)U.S adults said government should do more

Question 73

Regulation imposes new costs on business,including direct,indirect,and induced costs.Which type of additional cost is most important to consider in the regulation process?

Question 74

According to the authors,the tension between business and govermnent is "a clash of ethical systems." If it is,compare such a viewpoint with Neil Jacoby's comments provided in the text.

Question 75

Why is it incumbent upon goverrnnent to promote social goals such as safe working envirornnents,clean air,and safe products?

Question 76

Discuss the likelihood that the United States can develop a planned,successful industrial policy.

Question 77

Discuss the ability of the public or its goverrnnent to establish social priorities.

Question 78

One reason that government might regulate business is to control excessive competition.Govenunent also regulates business to control natural monopolies.Which situation is worse--monopoly or excessive competition?

Question 79

Using the arguments for and against industrial policy,discuss the benefits and detriments of goverrnnent support for the hydrogen economy (i.e. ,using hydrogen as a primary source of fuel to replace oil).

Question 80

In an economy that says it seeks to maximize profits for the individual finn,how can the United States govenunent justify regulating business to control excess profits?