Question 1

Marx asserted that capitalism has within it the seeds of its own destruction because of __________.
A) the lack labor-saving technology
B) the inevitability of monopolies
C) centralized government control
D) control of the state by the majority
Answer B

Accepted Answer

Marx believed that capitalism would inevitably lead to the concentration of capital into fewer hands, creating monopolies. This concentration of wealth and power would, according to Marx, lead to class struggles and eventually the overthrow of the capitalist system by the proletariat.

Question 2

One strategic reason that multinational corporations move to developing countries is that __________.
A) there are fewer regulations, which translates into more profits
B) the unemployment rate is much higher in developing countries
C) more regulations make factories safer for workers
D) there are fewer job seekers in the United States.
Answer A

Accepted Answer

Multinational corporations often move to developing countries to take advantage of fewer regulations, which can reduce costs and increase profits.

Question 3

There is a(n) __________ connection between the growth of multinational corporations and the reduction of semiskilled and unskilled jobs in the United States.
A) beneficial
B) irrelevant
C) direct
D) unknown
Answer C

Accepted Answer

The correct answer is C because there is a direct connection between the growth of multinational corporations and the reduction of semiskilled and unskilled jobs in the United States, as these corporations often outsource jobs to countries where labor is cheaper.

Question 4

Which of the following is an example of an indirect interlock?
A) Smith serves on the board of Company A, and Jones serves on the board of competing Company B. However, Smith and Jones both serve on the board of Company C.
B) Smith serves on the board of Company A, Jones serves on the board of Company B, and Miller serves on the board of Company C. None of them serve on any other board.
C) Smith, Jones, and Miller all serve on the board of Company A. None of them serve on any other board.
D) Smith, Jones, and Miller all started Company A. None of them now serve on the board.

Accepted Answer

An indirect interlock occurs when two individuals serve on the board of a third company, linking the first two companies indirectly through their shared board membership. In choice A, Smith and Jones serve on the board of Company C, creating an indirect link between Company A and Company B, where they serve individually.

Question 5

According to your text, Adam Smith would __________.
A) be against competition
B) not recognize capitalism in America today
C) not believe in the free market
D) approve of socialism
Answer B

Accepted Answer

Adam Smith, often referred to as the father of modern economics, is best known for his advocacy of free markets and capitalism. His seminal work, "The Wealth of Nations," argues for the efficiency of a self-regulating market. Given the significant changes and developments in the global economy since his time, including the rise of multinational corporations, extensive government regulations, and the digital economy, it's plausible that Smith might not fully recognize the form of capitalism practiced in America today.

Question 6

The linkage between corporations when an individual serves on the board of directors of two companies is called a(n) __________.
A) oligarchy
B) plutocracy
C) shared monopoly
D) interlocking directorate
Answer D

Accepted Answer

Interlocking directorate refers to the practice where members of a company's board of directors also serve on the board(s) of other companies, creating a linkage between the corporations.

Question 7

In contrast to socialism, capitalism is characterized by __________.
A) autocratic rule
B) free market competition
C) centralized government
D) state ownership of corporations
Answer B

Accepted Answer

Capitalism is characterized by free market competition, where businesses operate in a competitive environment with minimal government intervention.

Question 8

Critics argue that capitalism, because its objective is profit and not enhancing the human condition, promotes __________.
A) democracy
B) individual fulfillment
C) equality
D) inequality
Answer D

Accepted Answer

Critics of capitalism often argue that its focus on profit can lead to increased inequality, as those with capital can accumulate more wealth, potentially at the expense of others.

Question 9

The authors argue that many of the problems of U.S. society largely result from the __________.
A) maldistribution of power
B) conspiracy of the power elites
C) system being undermined by those who criticize it
D) system being undermined by the poor and disadvantaged

Accepted Answer

The authors likely argue that the maldistribution of power is a root cause of many societal problems, as this choice points to structural issues within the society that can lead to various forms of inequality and injustice, which are common themes in discussions about societal problems.

Question 10

Recent tax policies in the United States have __________.
A) exacerbated the unequal distribution of wealth
B) decreased the national debt
C) decreased the political influence of the wealthy
D) decreased the costs of running for public office
Answer A

Accepted Answer

Recent tax policies, such as the Tax Cuts and Jobs Act of 2017, have been criticized for disproportionately benefiting the wealthy, thereby exacerbating the unequal distribution of wealth.

Question 11

Contrary to classical economic theory, capitalism is now dominated by huge corporations that __________.
A) act in the best interest of the majority of Americans
B) distribute wealth equally among managers and employees
C) respond to the demands of the market
D) control the demands of the market
Answer D

Accepted Answer

Capitalism today is often characterized by the presence of large corporations that have significant market power, enabling them to influence or control market demands rather than merely responding to them. This contrasts with classical economic theories that assume markets are primarily driven by numerous small firms in perfect competition.

Question 12

According to Marx, capitalism will produce a class of oppressed people called the __________, bent on destroying it.
A) plutocracy
B) proletariats
C) oligopoly
D) capitalists
Answer B

Accepted Answer

Marx argued that capitalism would inevitably produce a class struggle between the bourgeoisie (capitalists who own the means of production) and the proletariat (workers who sell their labor), with the latter being oppressed and eventually rising up to overthrow the capitalist system.

Question 13

According to Marx's theory of capitalism, the social class in power controls the economy primarily by __________.
A) military force
B) centralized governmental power
C) owning the means of production
D) controlling nearby countries
Answer C

Accepted Answer

Marx's theory of capitalism posits that the ruling class, or bourgeoisie, maintains its power through ownership of the means of production, such as factories, land, and machinery, rather than through military force, government power, or control over other countries.

Question 14

Megamergers affect the entire economy in that they __________.
A) decentralize capital
B) eliminate jobs
C) increase corporate debt
D) increase union membership
Answer B

Accepted Answer

Megamers eliminate jobs by combining two companies into one, which often results in layoffs.

Question 15

The average U.S. worker would have to work nearly __________to make a CEO's annual salary.
A) 41 years
B) 62 years
C) 233 years
D) 421 years
Answer C

Accepted Answer

As of my last update in 2023, the disparity between the average U.S. worker's salary and CEO pay has been widely reported, with some sources indicating that it would take an average worker hundreds of years to earn what a CEO makes in a single year. The figure of 233 years is a dramatic representation of this disparity, highlighting the significant income inequality in the corporate sector.

Question 16

Which of the following is an example of a shared monopoly?
A) Company A, Company B, and Company C together supply 20 percent of all mufflers in the United States.
B) Company X, Company Y, and Company Z together supply 60 percent of all beds in the United States.
C) Company B, Company U, and Company Y together supply 30 percent of all snow tires in the United States.
D) Company T, Company O, and Company Y together supply 45 percent of all doll dresses in the United States.
Answer B

Accepted Answer

A shared monopoly typically involves a small number of firms controlling a large portion of the market share. In this case, Companies X, Y, and Z collectively supplying 60 percent of all beds in the United States represents a significant control over the market, fitting the criteria for a shared monopoly.

Question 17

By 2014, the average CEO (chief executive officer) of a Fortune 500 corporation was paid ____ times more than the average worker
A) 10
B) 100
C) 200
D) Over 300
Answer D

Accepted Answer

By 2014, the compensation of CEOs in Fortune 500 companies had dramatically increased, reaching levels where the average CEO was paid over 300 times more than the average worker. This reflects the growing income disparity between top executives and average employees within large corporations.

Question 18

__________ are corporate enterprises with holdings and subsidiaries in several different countries.
A) International cooperatives
B) Plutocracies
C) Oligopolies
D) Transnational corporations
Answer D

Accepted Answer

Transnational corporations are companies that operate in multiple countries, often with a centralized head office but with operational facilities and branches in several countries.

Question 19

In 2011, the average CEO of a Fortune 500 company was paid __________ times more than the average worker.
A) 50
B) 106
C) 303
D) 511
Answer C

Accepted Answer

In 2011, the average CEO of a Fortune 500 company was paid approximately 303 times more than the average worker, highlighting the significant income disparity between top executives and regular employees.

Question 20

Which of the following is an example of a direct interlock?
A) Smith and Jones both sit on the board of Company A.
B) Smith sits on the board of Company A and holds stock in Company A.
C) Jones sits on the board of Company A and Company B.
D) Jones and Smith are co-CEOs of Company A.
Answer C

Accepted Answer

A direct interlock occurs when a person holds a position of influence, such as a board membership, in two different companies simultaneously, as described in option C.

Quiz 2: Wealth and Power: the Bias of the System

Marx asserted that capitalism has within it the seeds of its own destruction because of __________.

One strategic reason that multinational corporations move to developing countries is that __________.

There is a(n) __________ connection between the growth of multinational corporations and the reduction of semiskilled and unskilled jobs in the United States.

Which of the following is an example of an indirect interlock?

According to your text, Adam Smith would __________.

The linkage between corporations when an individual serves on the board of directors of two companies is called a(n) __________.

In contrast to socialism, capitalism is characterized by __________.

Critics argue that capitalism, because its objective is profit and not enhancing the human condition, promotes __________.

The authors argue that many of the problems of U.S. society largely result from the __________.

Recent tax policies in the United States have __________.

Contrary to classical economic theory, capitalism is now dominated by huge corporations that __________.

According to Marx, capitalism will produce a class of oppressed people called the __________, bent on destroying it.

According to Marx's theory of capitalism, the social class in power controls the economy primarily by __________.

Megamergers affect the entire economy in that they __________.

The average U.S. worker would have to work nearly __________to make a CEO's annual salary.

Which of the following is an example of a shared monopoly?

By 2014, the average CEO (chief executive officer) of a Fortune 500 corporation was paid ____ times more than the average worker

__________ are corporate enterprises with holdings and subsidiaries in several different countries.

In 2011, the average CEO of a Fortune 500 company was paid __________ times more than the average worker.

Which of the following is an example of a direct interlock?