Deck 10: Regulating Business

Question 1

Competitive markets operate more efficiently when their participants have enough information to make informed choices.

Answer 1

True

Question 2

When companies dominate an industry,they may engage in unfair or destructive competition.

Answer 2

True

Question 3

The Code of Federal Regulations is a daily government publication containing proposed rules,final rules,and notice of other actions by federal regulatory agencies.

Answer 3

False

Question 4

Presidents have formal control over rulemaking by independent agencies.

Question 5

Externalities are costs of production borne by the enterprise that causes them.

Question 6

The Equal Protection Clause has been interpreted to give the federal government wide power to regulate business.

Question 7

The Emergency Economic Stabilization Act prohibited federal regulators from exchanging funds for an ownership interest in banks.

Question 8

A corporate agency is a regulatory agency in the executive branch run by a single administrator.

Question 9

Congress not only passes and amends laws but also approves presidential nominees as head regulators and makes appropriations to agencies.

Question 10

Measuring the benefits of federal regulation is easier than calculating the costs of these regulations.

Question 11

The removal or substantial reduction of the body of regulation covering an industry is known as deregulation.

Question 12

A policy is a decree issued by an agency to implement a law passed by Congress.

Question 13

The independent regulatory commission is a regulatory agency run by a small group of commissioners independent of political control.

Question 14

Statutes rarely contain all the specific rules needed to assure that their intended purpose is achieved.

Question 15

The impact of a regulation on employment,productivity,and innovation is a direct and easy way to calculate the costs of regulation.

Question 16

One way to characterize the cost of regulation is to calculate its total dollar cost.

Question 17

Guidance is information published in nonbinding documents like memoranda and circulars intended to clarify official regulations.

Question 18

Regulation is the effort by governments to achieve economic or social outcomes by directing the behavior of citizens,groups,and corporations.

Question 19

The Interstate Commerce Commission requires each agency to set up an adjudication process leading to trial before an administrative law judge.

Question 20

FranklinD.Roosevelt introduced the Fair Deal,a series of proposed actions in the fields of economic development and social welfare.

Question 21

Some regulations stop firms from making products in harmful ways,such as,by exposing workers to danger or by releasing pollutants.This is an example of the government trying to:

A) provide information.
B) resolve national and global problems.
C) regulate socially desirable production methods.
D) regulate special customers.

Question 22

Industries such as the steel industry and big agricultural sectors such as cotton,peanuts,sugarcane,and tobacco benefit from protectionist rules and subsidies.This is an example of the government:

A) passing regulations to benefit special interests.
B) regulating socially desirable goods and services.
C) regulating socially desirable production methods.
D) passing resolution of national and global problems.

Question 23

Regulation of railroads,banks,and natural resources are examples of the government:

A) passing regulations to benefit special interests.
B) regulating socially desirable goods and services.
C) regulating socially desirable production methods.
D) passing resolutions of national and global problems.

Question 24

If dominating companies in an industry cut prices until competitors leave the market,and then raise prices again,they are engaging in:

A) destructive competition.
B) pure competition.
C) monopolistic competition.
D) perfect competition.

Question 25

The clause in Article I,Section 8 of the Constitution that gives the Congress the power to regulate business is called the:

A) Commerce Clause.
B) Contract Clause.
C) Establishment Clause.
D) Vesting Clause.

Question 26

Costs of production borne not by the enterprise that causes them but by society are called:

A) internal diseconomies.
B) internal economies.
C) benefits.
D) externalities.

Question 27

Which of the following is true regarding the Interstate Commerce Commission?

A) It was an executive agency.
B) It was run by 10 commissioners.
C) The commissioners served staggered six-year terms.
D) Five of the commissioners were to be of any one political party.

Question 28

Which of the following is true regarding the executive agency?

A) The administrator can be removed only for cause.
B) It is an independent agency.
C) It is run by a single administrator.
D) The administrator is nominated by the Senate and confirmed by the president.

Question 29

The first independent regulatory commission that was set up by the Congress to regulate the railroads was the:

A) Public Utilities Commission.
B) Interstate Commerce Commission.
C) Public Service Commission.
D) Railroad Revitalization Commission.

Question 30

When a factory dumps toxic waste into a river and pollutes the river,the costs borne by society in order to clean up the mess is called a(n):

A) externality.
B) internal diseconomy.
C) internal economy.
D) natural monopoly.

Question 31

As a response to the economic depression in 1932,President FranklinD.Roosevelt proposed the ____,a series of programs to bring "Relief,Recovery,and Reform."

A) New Deal
B) Square Deal
C) Fair Deal
D) New Frontier

Question 32

When one company supplies the entire market for a good or service more cheaply than a combination of smaller firms,it has:

A) an oligopoly.
B) pure competition.
C) a natural monopoly.
D) monopolistic competition.

Question 33

Which part of the U.S.Constitution gives the federal government the right to regulate business?

A) Article I
B) Article III
C) Article V
D) Article VI

Question 34

In 1914,Congress set up a second independent regulatory commission,the ____,to prohibit unfair means of competition.

A) Interstate Commerce Commission
B) United States Consumer Product Safety Commission
C) U.S.Commission on Civil Rights
D) Federal Trade Commission

Question 35

_____ is the process of removing or substantially reducing the body of control covering an industry.

A) Liberalization
B) Privatization
C) Globalization
D) Deregulation

Question 36

The first wave of regulation:

A) oversaw the set up of independent regulatory commissions.
B) was not predominately promotional for business.
C) allowed the government to give vast financial subsidies and grants to private interests.
D) eliminated tariffs to protect infant industries.

Question 37

When the Department of Agriculture sets standards for and inspects foods entering the production process,it is:

A) regulating socially desirable goods and services.
B) resolving national and global problems.
C) regulating to protect special interests.
D) regulating socially desirable production methods.

Question 38

During the first wave of regulation,most of the offices that were set up to perform regulatory functions were primarily promotional in nature.Which of the following was an exception?

A) Copyright Office
B) Bureau of Fisheries
C) Comptroller of the Currency
D) Patent and Trademark Office

Question 39

A local electric company that,without government regulation,restricts output and raises price without fear of competition is a typical example of:

A) an oligopoly.
B) a natural monopoly.
C) pure competition.
D) monopolistic competition.

Question 40

A(n)_____ agency is a regulatory agency run by a small group of commissioners free of political control.

A) traditional executive branch
B) general regulatory
C) federal executive department
D) independent regulatory

Question 41

After publication in the _____ final regulations are codified in the:

A) Code of Federal Regulations;Official Congressional Directory.
B) Federal Register;Code of Federal Regulations.
C) Code of Federal Regulations;Federal Register.
D) Federal Register;United States Reports.

Question 42

Government activity that guides the behavior of citizens,groups,and corporations to reach economic or social goals is known as:

A) autarky.
B) national treatment.
C) regulation.
D) liberalization.

Question 43

Proposed rules are sent by executive branch agencies to the _____ where a staff of about 50 scrutinizes the proposed rule to see if it is really needed,if all alternatives have been examined,and whether its costs are justified.

A) Office of Administration
B) Office of Management and Budget
C) Office of Information and Regulatory Affairs
D) Office of Personnel Management

Question 44

Which of the following is true about regulatory statutes?

A) A bill containing regulatory authority has to be passed by at least one house of the Congress.
B) After the bill containing regulatory authority is passed,it is assigned exclusively to an independent commission.
C) Statutes contain all the specific rules needed.
D) Federal regulation originates in an act of Congress.

Question 45

When an agency decides to promulgate a rule and the draft is ready,the agency publishes it as a proposed rule in the:

A) Code of Federal Regulations.
B) Official Congressional Directory.
C) United States Reports.
D) Federal Register.

Question 46

The basic steps of the rulemaking process were set forth in the:

A) Congressional Review Act.
B) Sherman Antitrust Act.
C) Administrative Procedures Act.
D) Emergency Economic Stabilization Act.

Question 47

Executive-branch agencies have to submit proposed and final rules to the ____,whereas independent regulatory commissions must follow procedures in the:

A) Office of Administration;Congressional Review Act.
B) Office of Management and Budget;Sherman Antitrust Act.
C) Office of Personnel Management;Emergency Economic Stabilization Act.
D) Office of Information and Regulatory Affairs;Administrative Procedures Act.

Question 48

Which of the following statements is true about rulemaking in the U.S.regulatory process?

A) Proposed rules are sent by independent regulatory agencies to the Office of Information and Regulatory Affairs.
B) Publication of a proposed rule opens a period,usually 60 to 90 days,during which the public can comment to the agency.
C) Rulemaking for lesser regulations to be completed often takes years.
D) An OIRA staff of about 50 scrutinizes a proposed rule to see if it is really needed.

Question 49

Which of the following is true about guidance?

A) It is legally binding.
B) It is issued exclusively by Congress.
C) It is intended to clarify official regulations.
D) It does not affect existing rules.

Question 50

A _____ is a decree issued by an agency to implement a law passed by Congress.

A) veto
B) rule
C) revocation
D) stratagem

Question 51

What is a "significant regulatory action"?

A) A rule to control risk in financial markets.
B) A rule with an annual effect on the economy of $100 million or more.
C) A rule that gives the federal government wide power to regulate business.
D) A rule to bring "Relief,Recovery,and Reform."

Question 52

The _____ is a daily government publication containing proposed rules,final rules,and notices of public meetings by regulatory agencies,and presidential executive orders.

A) Federal Register
B) Code of Federal Regulations
C) Official Congressional Directory
D) United States Reports

Question 53

Which Act was passed by Congress in 2008 to restore financial stability?

A) The Expedited Funds Availability Act
B) The Emergency Economic Stabilization Act
C) The Congressional Accountability Act
D) The Tax Extenders and Alternative Minimum Tax Relief Act

Question 54

The _____ was a program that gave federal regulators power to exchange funds for an ownership interest in banks and corporations.

A) Troubled Asset Relief Program
B) Temporary Liquidity Guarantee Program
C) NCUA Corporate Stabilization Program
D) Commercial Paper Funding Facility Program

Question 55

The _____ Act mandates that most new rules cannot go into effect until 60 days after they have been sent to Congress for analysis.

A) Congressional Review
B) Administrative Procedure
C) Congressional Accountability
D) Apportionment

Question 56

When ready,rules in their final wording are printed in the:

A) Federal Register.
B) Code of Federal Regulations.
C) Official Congressional Directory.
D) United States Reports.

Question 57

Which of the following statements is true about the Department of Homeland Security?

A) It issues rules affecting every industry.
B) Its budget is almost 10 times that of the next largest agency,the EPA.
C) It has 60,000 employees.
D) It is primarily a business regulator.

Question 58

In addition to regulations,agencies issue larger volumes of _____ in documents such as memoranda,circulars,compliance manuals,and advisory opinions.

A) rules
B) policies
C) principles
D) guidance

Question 59

Which 2010 Act,passed to control risk in financial markets,is the biggest surge in economic regulation since the New Deal?

A) The Dodd-Frank Act
B) The Expedited Funds Availability Act
C) The Tax Extenders and Alternative Minimum Tax Relief Act
D) The Congressional Accountability Act

Question 60

To administer the Troubled Asset Relief Program,Congress created a new agency in the Treasury Department known as the:

A) Office of the Comptroller of the Currency.
B) Office of Financial Stability.
C) Office of Financial Institutions.
D) Office of Government Financial Policy.

Question 61

Poorer countries generally have heavier regulation.How does this impact business?

Question 62

Explain the process of rulemaking.

Question 63

The burden of regulation can be measured or characterized by all of the following methods EXCEPT:

A) impact of regulation on innovation.
B) total dollar cost.
C) cost of administering the regulatory process.
D) impact of regulation on unemployment.

Question 64

What was the scenario during the first wave of federal regulation of business?

Question 65

What are some of the objectives that justify social and political regulations?

Question 66

What is an independent regulatory commission? How did the first independent regulatory commission come into existence?

Question 67

What is deregulation?

Question 68

The general rule that federal courts should defer to agency rules that are based on reasonable interpretations of ambiguous statutes is known as the _____ doctrine.

A) laissez-faire
B) Act of State
C) Chevron
D) Bernal

Question 69

The _____ Act requires each agency to set up an adjudication process leading to trial before an administrative law judge.

A) Congressional Accountability
B) Administrative Procedure
C) Congressional Review
D) Apportionment

Question 70

What is an executive agency?

Question 71

Explain the term "natural monopoly."

Question 72

Define the Commerce Clause.

Question 73

Which of the following statements about regulations is false?

A) Regulation varies widely around the world.
B) Poor countries regulate business in a consistent manner.
C) Poor countries regulate business the most.
D) Heavier regulation brings bad outcomes.

Question 74

Discuss Congress oversight? Does it influence agency actions?

Question 75

Discuss the World Bank study of the regulation of doing business in nations other than the U.S.

Question 76

Which of the following is NOT a part of the principles of good regulation set forth by the World Bank?

A) Increase court involvement in business matters.
B) Focus on enhancing property rights.
C) Expand the use of technology.
D) Make reform a continuous process.

Question 77

What is an independent regulatory commission?

Question 78

What is regulation? What is the first step in the creation of a new regulation?

Question 79

List some of the market failures that justify regulation.

Question 80

How is the cost of regulation calculated?