Deck 11: Business,Government,and Regulation

Question 1

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

Answer 1

True

Question 2

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

Answer 2

False

Question 3

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

Answer 3

True

Question 4

Newer social regulations covers business practices in all industries.

Question 5

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

Question 6

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

Question 7

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

Question 8

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

Question 9

Deregulation has provided uniform benefits for all parties affected.

Question 10

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

Question 11

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

Question 12

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

Question 13

Keeping people informed is an important social goal of government.

Question 14

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

Question 15

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

Question 16

Public interest in the relationship between government and business has always been low.

Question 17

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

Question 18

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

Question 19

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

Question 20

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

Question 21

Business generally follows the ethic of

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

Question 22

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.

Question 23

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 24

Which of the following is not a valid argument against forming an industrial policy?

A)It reduces the market's efficiency.
B)The success of existing industrial policies has been variable.
C)Existing attempts to form industrial policies have generally been irrational and uncoordinated.
D)Industrial policies violate anti-trust legislation.

Question 25

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.

Question 26

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 27

Government is generally thought to follow the ethic of

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

Question 28

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.

Question 29

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 30

Which of the following is not mentioned as a frustration executives have with government officials,according to the 2010 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 31

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.

Question 32

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 33

The opposite of privatization could be considered

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

Question 34

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 35

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.

Question 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.

Question 37

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.

Question 38

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

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

Question 39

Strong 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.

Question 40

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.

Question 41

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 42

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.

Question 43

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 44

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 45

Governmental regulations that seek to further societal objectives are examples of

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

Question 46

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 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

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 49

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 50

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 51

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 52

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.

Question 53

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.

Question 54

Government payments to industries or groups with special qualifications are called

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

Question 55

The newest type of social regulations is concerned primarily with

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

Question 56

Negative externalities are often referred to as

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

Question 57

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.

Question 58

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 59

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 60

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

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

Question 61

Provide a short answer to each of these questions.Be sure to fully explain your answer.
One of the functions that proponents want to privatize is education.Discuss the benefits and detriments of privatizing education.

Question 62

Provide a short answer to each of these questions.Be sure to fully explain your answer.
One reason that government might regulate business is to control excessive competition.Government also regulates business to control natural monopolies.Which situation is worse--monopoly or excessive competition?

Question 63

Provide a short answer to each of these questions.Be sure to fully explain your answer.
Distinguish between producing a service and providing a service.Why is this distinction important in the debate over privatization?

Question 64

Utilize the knowledge you have gained to respond to the following essay questions.Your answers should state your position and use logical arguments and content from this and other chapters in the textbook to support it.
According to the authors,the tension between business and government is "a clash of ethical systems." If it is,compare such a viewpoint with Neil Jacoby's comments provided in the text.

Question 65

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.

Question 66

Provide a short answer to each of these questions.Be sure to fully explain your answer.
Discuss the likelihood that the United States can develop a planned,successful industrial policy.

Question 67

Provide a short answer to each of these questions.Be sure to fully explain your answer.
Why is it incumbent upon government to promote social goals such as safe working environments,clean air,and safe products?

Question 68

Provide a short answer to each of these questions.Be sure to fully explain your answer.
Discuss the ability of the public or its government to establish social priorities.

Question 69

Which of the following is not an effect of induced costs?

A)small businesses may be adversely affected.
B)new agencies created.
C)new investments in plant and equipment may be affected.
D)innovation may be affected.

Question 70

Utilize the knowledge you have gained to respond to the following essay questions.Your answers should state your position and use logical arguments and content from this and other chapters in the textbook to support it.
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 71

Utilize the knowledge you have gained to respond to the following essay questions.Your answers should state your position and use logical arguments and content from this and other chapters in the textbook to support it.
Industrial policy sometimes allows,or requires,government financial assistance to certain industries (e.g. ,the airline industry or the railroad industry).In addition to industry-wide assistance,the government has on occasion provided bailouts for individual firms.Is bailing out a specific company an appropriate use of government regulation?

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

Utilize the knowledge you have gained to respond to the following essay questions.Your answers should state your position and use logical arguments and content from this and other chapters in the textbook to support it.
Why does government regulate business?

Question 74

Provide a short answer to each of these questions.Be sure to fully explain your answer.
In an economy that says it seeks to maximize profits for the individual firm,how can the United States government justify regulating business to control excess profits?

Question 75

Provide a short answer to each of these questions.Be sure to fully explain your answer.
Who determines the public interest?

Question 76

Provide a short answer to each of these questions.Be sure to fully explain your answer.
Discuss the reasons for the overlapping trends of regulation and deregulation.

Question 77

Which of the following is not preventing privatization?

A)the global economic recession.
B)service provisions
C)public backlash.
D)high leverage investments in state and local infrastructures.

Question 78

Utilize the knowledge you have gained to respond to the following essay questions.Your answers should state your position and use logical arguments and content from this and other chapters in the textbook to support it.
Using the arguments for and against industrial policy,discuss the benefits and detriments of government support for the hydrogen economy (i.e. ,using hydrogen as a primary source of fuel to replace oil).

Question 79

Provide a short answer to each of these questions.Be sure to fully explain your answer.
Compare and contrast economic regulation and social regulation.

Question 80

Which of the following is not a U.S.preference on industrial policy?

A)one that enables industrialization.
B)one that focuses on science.
C)one that does not conflict with widely held view on the role of government in the economy.
D)one that enables specialization.