Question 1

Identify the correct statement about a federal agency.

Accepted Answer

In creating a federal agency,Congress delegates a portion of its authority to that body.Congress acknowledges the existence of a problem and recognizes that it is not the appropriate body to address the specific elements of that problem-hence the agency.

Question 2

Which of the following ended Prohibition in 1933 and gave the states broad authority to regulate the sale of alcohol?

Accepted Answer

The Twenty-First Amendment ended Prohibition in 1933 and gave the states broad authority to regulate the sale of alcohol.The central question facing the Court was the conflict between the requirements of the Commerce Clause versus the requirements of the
Twenty-First Amendment to the U.S.Constitution.

Question 3

Federal Trade Commission rules providing for a cooling-off period of three business days within which the buyer may cancel door-to-door sales contracts are an example of an agency's application of its _____ rules.

Accepted Answer

Federal Trade Commission rules providing for a cooling-off period of three business days within which the buyer may cancel door-to-door sales contracts are an example of an agency's application of its legislative rules.

Question 4

Which of the following statements is true of licensure?

Accepted Answer

Critics contend that licensure is often designed to block the entry of competitors and that the benefits of licensure are exceeded by its costs in increased prices,decreased services,and administrative overhead.Local government intervention in business typically involves various licensure requirements.

Question 5

Which of the following statements is true of executive functions of federal agencies?

Accepted Answer

Federal agencies perform the executive function of resolving tax disputes.They enter into contracts,lease federal lands,register securities offerings,award grants,settle workers' compensation claims,administer government benefits to the citizenry,and so on.

Question 6

Which of the following was the first federal regulatory agency that Congress established in 1887 for the purpose of regulating railroad routes and rates?

Accepted Answer

Congress established the Interstate Commerce Commission (ICC),the first federal regulatory agency,in 1887 for the purpose of regulating railroad routes and rates.The Food and Drug Administration (FDA-1907) and the Federal Trade Commission (FTC-1914) followed,but federal regulation became pervasive only in response to the Great Depression of the 1930s.

Question 7

The _____ was enacted to provide a framework for agency rule-making and to detail broad standards for judicial review of agency decisions.

Accepted Answer

The Administrative Procedure Act was enacted to provide a framework for agency rule-making and to detail broad standards for judicial review of agency decisions.The administrative agencies act as mini governments,performing quasi-executive,quasi-legislative (rule-making),and quasi-judicial (adjudicatory) roles broadly involving control of supply,rates,and conduct in large segments of American life.

Question 8

Which of the following is an example of the federal government exceeding its authority in regulating commerce?

Accepted Answer

In June 2012,the U.S.Supreme Court,by a 5-4 vote,upheld the constitutionality of the Affordable Care Act (Obamacare),but the decision raised further doubts about the federal government's Commerce Clause power.The core of the Supreme Court review of the Affordable Care Act (Obamacare) involved what is called the "individual mandate:" a requirement in the bill forcing most Americans to maintain "minimum essential" health insurance.The Court ruled that the individual mandate was a violation of the Commerce Clause but was upheld on other ground separate and distinct from commerce powers.

Question 9

When all the costs and benefits of a good or service are not fully internalized or absorbed,those costs or benefits fall elsewhere as what economists have labeled _____.

Accepted Answer

When all the costs and benefits of a good or service are not fully internalized or absorbed by producers or consumers,those costs or benefits fall elsewhere as what economists have labeled externalities,neighborhood effects,or spillovers.Pollution is a characteristic example of a negative externality.Positive externalities are those in which a decision maker does not receive the full benefit of a decision because a portion of those benefits "spill over" on to third parties (often society at large) who were not direct participants in the decision.

Question 10

Today,attention in the monopoly area is largely directed to:

Accepted Answer

Today,attention in the monopoly area is largely directed to anticompetitive conduct such as price fixing and abuse of market dominance that results in a reduction of open,efficient competition.The government intervenes to thwart anticompetitive behaviors throughout the marketplace.

Question 11

Which of the following acts forbids the use,cultivation,or possession of marijuana for any purpose?

Accepted Answer

The federal Controlled Substances Act (CSA) forbids the use,cultivation,or possession of marijuana for any purpose.However,nearly half of the states have reduced their restraints on marijuana use,and in two states,Washington and Colorado,voters have "legalized" adult,recreational consumption of the drug.

Question 12

Which of the following is an example of the federal regulatory authority of control of information?

Accepted Answer

Interpretive rules offer an administrative agency's view of the meaning of those statutes for which the agency has administrative responsibility.Internal Revenue Service regulations are an example of interpretive rules.

Question 13

Which of the following statements is true of judicial review of agency rules?

Accepted Answer

Judges readily sustain the judgment of the agency where reasonable.The jurists,being generalists in the field of law,have been reluctant to overrule the judgment of specialists,and very crowded judicial calendars act as a natural brake on activist judicial review.

Question 14

Which of the following is an example of an executive function performed by a federal agency?

Accepted Answer

Procedural rules delineate a federal agency's internal operating structure and methods.The Administrative Procedure Act provides for both informal (often called "notice and comment") and formal rule-making processes for legislative rules.

Question 15

Which of the following statements is true of public goods?

Accepted Answer

The added cost of benefiting one person is zero or nearly so,and,in any case,no one can effectively be denied the benefits of the activity.In the absence of government regulations,public goods would not be produced in adequate quantities.

Question 16

Internal Revenue Service regulations are an example of _____ rules.

Accepted Answer

Internal Revenue Service regulations are an example of interpretive rules.Interpretive rules offer the agency's view of the meaning of those statutes for which the agency has administrative responsibility.

Question 17

Which of the following statements is true of independent federal agencies?

Accepted Answer

Congress created independent federal agencies via statutes labeled enabling legislation.The president has direct authority over the executive agencies while the independent agencies are intended to operate with less fear of interference.

Question 18

Which of the following statements is true of rule-making by agencies?

Accepted Answer

The federal government provides an online portal where the public can comment on proposed rules.Having received public comments,the agency either discontinues the process or prepares the final rule.

Question 19

Which of the following statements is true of federal agencies?

Accepted Answer

The president has direct authority over the executive federal agencies while the independent agencies are intended to operate with less fear of interference.In practice,of course,the president and Congress have substantial influence on all the agencies.

Question 20

Which of the following served as the basis for the creation of a fourth branch of government by Congress?

Accepted Answer

The primary purpose of most of the early agencies was to address economic concerns.Then with the arrival of the prosperity and social turbulence of the 1960s and 1970s,Congress built a rather massive array of new agencies directed not to economic issues but to social reform in such areas as discrimination,the environment,job safety,and product safety.

Quiz 8: Government Regulation of Business