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1. Government and business together establish the regulatory rules under which business operates in society.
True False
2. In Europe, unions are prohibited by law to be on businesses' administrative boards.
True False
3. A cooperative government-business relationship on one issue does not guarantee cooperation on another issue.
True False
4. Public policy is a plan of action undertaken by business to influence the government.
True False
5. In non-democratic countries, the power of government may derive from a monarchy, military dictatorship, or religious authority.
True False
6. Public policy effects are always unintended consequences of an action.
True False
7. Monetary policies refer to policies that affect the supply, demand and value of the nation's currency.
True False
8. A national health care policy is an example of an economic policy.
True False
9. Economic regulations aim at modifying the normal operations of the free market and the forces of supply and demand.
True False
10. Cost-benefit analysis is often used to determine the costs of regulation.
True False
11. Most experts can agree the government spending on U.S. regulatory activities will begin to decrease by the early 2010s.
True False
12. Regulatory activity often is cyclical.
True False
13. Regulation cannot be applied to international business behavior.
True False
14. Sometimes national leaders resist the notion of international regulation, seeking to control matters of commerce themselves within their own countries.
True False
15. The chairman of the International Chamber of Shipping called on the United Nations to loosen global emissions regulations for all vessels.
True False
16. Managers' understanding of government regulations is:
A. Both a domestic and international issue.
B. Primarily a domestic issue.
C. Primarily an international issue.
D. An international issue only for large firms.
17. In 2009, the International Monetary Fund and the World Bank projected that the global economic crisis would lead to losses:
A. Within the financial sector only.
B. Of more than $4 trillion in the value of stock and other assets.
C. That would prohibit governments from imposing any new regulations.
D. Of less than $4 million in the value of stock and other assets.
18. Government's role is to create and enforce laws that:
A. Control businesses' actions in society.
B. Protect businesses' interest in society.
C. Protect society from business.
D. Balance the relationship between business and society.
19. Governments hold the power to:
A. Grant permission for only specific business activity.
B. Grant or refuse permission for many types of business activity.
C. Refuse permission for only government funded activity.
D. None of the above.
20. Around the world, government:
A. Tends to cooperate with business.
B. Tends to be in conflict with business.
C. Sometimes cooperates and sometimes is in conflict with business.
D. Tends to be controlled by business.
21. Cooperation between business and government often occurs when:
A. They encounter a common problem or enemy.
B. Business can afford it.
C. Business is required by law to cooperate.
D. Government has the support of the people.
22. An example of an illegitimate government can be seen in:
A. Myanmar (Burma).
B. Russia.
C. The United States.
D. Spain.
23. Public policy is a basic set of goals, plans and actions undertaken by:
A. Political lobbyists.
B. A government.
C. Business advocacy groups.
D. Police and fire departments.
24. Past decisions of the courts, the original basis for the U.S. legal system, are called:
A. Torts.
B. Amendments.
C. Legitimate actions.
D. Common laws.
25. The Mullahs in Iran is an example of the power of government derived from:
A. A monarchy.
B. A military dictatorship.
C. A religious authority.
D. A democracy.
26. Governments being asked to ban the use of cell phones by drivers are examples of a public policy:
A. Input.
B. Goal.
C. Effect.
D. Tool.
27. The National Safety Council estimate that motorists using cell phones are:
A. As safe as motorists who do not use cell phones.
B. Responsible for 6% of U.S. auto accidents each year.
C. Ten times more likely to crash.
D. More likely to contract ear infections.
28. Public policy tools involve a combination of:
A. Incentives and political favors.
B. Penalties and prison terms.
C. Incentives and penalties.
D. Political favors and prison terms.
29. Public policy effects are:
A. Impossible to measure.
B. Easily quantifiable for the trained public policy expert.
C. Only known ten years after the public policy is enacted.
D. Sometimes intended and sometimes unintended.
30. Economic policies include:
A. Fiscal and monetary policies.
B. Monetary and social assistance policies.
C. Fiscal and social assistance policies.
D. Policies initiated by the Federal Reserve System.
31. Patterns of government taxing and spending that are intended to stimulate or support the economy are:
A. International standards policies.
B. Social assistance policies.
C. Fiscal policies.
D. Monetary policies
32. An example of an early economic public policy was:
A. The abolition of slavery
B. Public works projects of the Great Depression.
C. The creation of the Homeland Security Office.
D. President Johnson's Great Society programs.
33. Policies that affect the supply, demand, and value of a nation's currency are:
A. International standards policies.
B. Social assistance policies.
C. Fiscal policies.
D. Monetary policies.
34. By raising and lowering the interest rates at which private banks borrow money from the government, the Federal Reserve Bank:
A. Influences the size of the nation's money supply.
B. Influences the value of the dollar.
C. Minimizes investor confidence about the nation's future.
D. Both A and B, but not C.
35. The primary way of accomplishing public policy is through:
A. Waiting for businesses to act.
B. Lobbying Congress.
C. Regulation.
D. Writing your politician.
36. Which of the following are examples of natural monopolies?
A. Electric utilities and railroads.
B. Cable television and the media.
C. Internet services and trucking.
D. None of the above.
37. Regulation can be argued as justified based on:
A. Collective market theory.
B. Utilitarian and justice grounds.
C. The life cycle of regulation.
D. Tradition.
38. Economic regulations:
A. Can only exist for 37 years unless renewed.
B. Apply only to older industries.
C. Always conflict with social regulation.
D. Cut across industry lines.
39. Which of the following is not an example of a social regulatory agency?
A. Consumer Product Safety Commission.
B. Equal Employment Opportunity Commission.
C. National Highway Traffic Safety Administration.
D. National Labor Relations Board.
40. An example of a regulatory agency charged with enforcing social regulation is:
A. Federal Aviation Administration.
B. Federal Trade Commission.
C. Federal Communications Commission.
D. Internal Revenue Service.
41. Total social regulation costs are:
A. Slightly higher than total economic regulation costs.
B. Slightly less than total economic regulation costs.
C. Significantly higher than total economic regulation costs.
D. Equal to total economic regulation costs.
42. Deregulation is often:
A. A politically popular idea.
B. A politically unpopular idea.
C. Seen during a Democratic federal administration.
D. Found in European countries but not in the United States
43. Deregulation has occurred in the following industries:
A. Commercial airlines, sheet metal, and interstate trucking.
B. Commercial airlines, railroads, and financial institutions.
C. Commercial airlines, interstate trucking, and silicon chip manufacturing.
D. Financial institutions, railroads, and silicon chip manufacturing.
44. Reregulation is:
A. The adoption of regulation in another country to promote trade.
B. Necessary since all regulation has a time limit.
C. The increase or expansion of government regulation.
D. The shifting of regulation to the state level from the national level.
45. In 2008 two new global regulations to reduce injuries from accidents by better safety glazing of windows and mandating more geometric fitting head restraints in all vehicles were adopted by the:
A. United Nations.
B. European Commission.
C. National Transportation and Safety Board.
D. World Forum for Harmonization of Vehicle Regulations.
46. How do governments seek to cooperate with or work at arm's length with business? Does it matter whether the government is legitimately elected or has illegitimately acquired power?
47. Define each key element of public policy process and provide an illustration or example for each element.
48. Compare and contrast economic policies with social assistance policies.
49. Identify and compare the four reasons why governments turn to regulation as a way to solve their problems.
50. Government regulations come in different forms. Discuss the major types of government regulations of business.
51. What could the United States government do about the out of control costs of regulation and the staffing of regulatory agencies in the United States?
52. Why does international regulation occur? Discuss the conditions that affect the regulation of business in a global context.
1. (p. 173) Government and business together establish the regulatory rules under which business operates in society.
FALSE
2. (p. 173) In Europe, unions are prohibited by law to be on businesses' administrative boards.
FALSE
3. (p. 174) A cooperative government-business relationship on one issue does not guarantee cooperation on another issue.
TRUE
4. (p. 175) Public policy is a plan of action undertaken by business to influence the government.
FALSE
5. (p. 176) In non-democratic countries, the power of government may derive from a monarchy, military dictatorship, or religious authority.
TRUE
6. (p. 178) Public policy effects are always unintended consequences of an action. FALSE
7. (p. 179) Monetary policies refer to policies that affect the supply, demand and value of the nation's currency.
TRUE 8. (p. 179) A national health care policy is an example of an economic policy.
FALSE 9. (p. 182) Economic regulations aim at modifying the normal operations of the free market and the forces of supply and demand.
TRUE 10. (p. 186) Cost-benefit analysis is often used to determine the costs of regulation.
TRUE 11. (p. 187) Most experts can agree the government spending on U.S. regulatory activities will begin to decrease by the early 2010s.
FALSE 12. (p. 188) Regulatory activity often is cyclical.
TRUE 13. (p. 189) Regulation cannot be applied to international business behavior.
FALSE 14. (p. 189) Sometimes national leaders resist the notion of international regulation, seeking to control matters of commerce themselves within their own countries.
TRUE
15. (p. 190) The chairman of the International Chamber of Shipping called on the United Nations to loosen global emissions regulations for all vessels.
FALSE Multiple Choice Questions
16. (p. 170) Managers' understanding of government regulations is:
A. Both a domestic and international issue.
B. Primarily a domestic issue.
C. Primarily an international issue.
D. An international issue only for large firms.
Difficulty: Easy
17. (p. 171) In 2009, the International Monetary Fund and the World Bank projected that the global economic crisis would lead to losses:
A. Within the financial sector only.
B. Of more than $4 trillion in the value of stock and other assets.
C. That would prohibit governments from imposing any new regulations.
D. Of less than $4 million in the value of stock and other assets.
Difficulty: Easy
18. (p. 173) Government's role is to create and enforce laws that:
A. Control businesses' actions in society.
B. Protect businesses' interest in society.
C. Protect society from business.
D. Balance the relationship between business and society.
Difficulty: Medium
19. (p. 173) Governments hold the power to:
A. Grant permission for only specific business activity.
B. Grant or refuse permission for many types of business activity.
C. Refuse permission for only government funded activity.
D. None of the above.
Difficulty: Medium
20. (p. 173 - 175) Around the world, government:
A. Tends to cooperate with business.
B. Tends to be in conflict with business.
C. Sometimes cooperates and sometimes is in conflict with business.
D. Tends to be controlled by business.
Difficulty: Medium
21. (p. 174) Cooperation between business and government often occurs when:
A. They encounter a common problem or enemy.
B. Business can afford it.
C. Business is required by law to cooperate.
D. Government has the support of the people.
Difficulty: Hard
22. (p. 175) An example of an illegitimate government can be seen in:
A. Myanmar (Burma).
B. Russia.
C. The United States.
D. Spain.
Difficulty: Easy
23. (p. 175) Public policy is a basic set of goals, plans and actions undertaken by:
A. Political lobbyists.
B. A government.
C. Business advocacy groups.
D. Police and fire departments.
Difficulty: Medium
24. (p. 176) Past decisions of the courts, the original basis for the U.S. legal system, are called:
A. Torts.
B. Amendments.
C. Legitimate actions.
D. Common laws.
Difficulty: Hard
25. (p. 176) The Mullahs in Iran is an example of the power of government derived from:
A. A monarchy.
B. A military dictatorship.
C. A religious authority.
D. A democracy.
Difficulty: Medium
26. (p. 176) Governments being asked to ban the use of cell phones by drivers are examples of a public policy:
A. Input.
B. Goal.
C. Effect.
D. Tool.
Difficulty: Easy
27. (p. 176) The National Safety Council estimate that motorists using cell phones are:
A. As safe as motorists who do not use cell phones.
B. Responsible for 6% of U.S. auto accidents each year.
C. Ten times more likely to crash.
D. More likely to contract ear infections.
Difficulty: Easy
28. (p. 177) Public policy tools involve a combination of:
A. Incentives and political favors.
B. Penalties and prison terms.
C. Incentives and penalties.
D. Political favors and prison terms.
Difficulty: Medium
29. (p. 178) Public policy effects are:
A. Impossible to measure.
B. Easily quantifiable for the trained public policy expert.
C. Only known ten years after the public policy is enacted.
D. Sometimes intended and sometimes unintended.
Difficulty: Easy
30. (p. 178 - 179) Economic policies include:
A. Fiscal and monetary policies.
B. Monetary and social assistance policies.
C. Fiscal and social assistance policies.
D. Policies initiated by the Federal Reserve System.
Difficulty: Hard
31. (p. 178 - 179) Patterns of government taxing and spending that are intended to stimulate or support the economy are:
A. International standards policies.
B. Social assistance policies.
C. Fiscal policies.
D. Monetary policies
Difficulty: Medium
32. (p. 179) An example of an early economic public policy was:
A. The abolition of slavery.
B. Public works projects of the Great Depression.
C. The creation of the Homeland Security Office.
D. President Johnson's Great Society programs.
Difficulty: Medium
33. (p. 179) Policies that affect the supply, demand, and value of a nation's currency are:
A. International standards policies.
B. Social assistance policies.
C Fiscal policies.
D. Monetary policies.
Difficulty: Medium
34. (p. 179) By raising and lowering the interest rates at which private banks borrow money from the government, the Federal Reserve Bank:
A. Influences the size of the nation's money supply.
B. Influences the value of the dollar.
C. Minimizes investor confidence about the nation's future.
D. Both A and B, but not C.
Difficulty: Hard
35. (p. 180) The primary way of accomplishing public policy is through:
A. Waiting for businesses to act.
B. Lobbying Congress.
C. Regulation.
D. Writing your politician.
Difficulty: Easy
36. (p. 181) Which of the following are examples of natural monopolies?
A. Electric utilities and railroads.
B. Cable television and the media.
C. Internet services and trucking.
D. None of the above.
Difficulty: Hard
37. (p. 181) Regulation can be argued as justified based on:
A. Collective market theory.
B. Utilitarian and justice grounds.
C. The life cycle of regulation.
D. Tradition.
Difficulty: Hard
38. (p. 181 - 182) Economic regulations:
A. Can only exist for 37 years unless renewed.
B. Apply only to older industries.
C. Always conflict with social regulation.
D. Cut across industry lines.
Difficulty: Medium
39. (p. 185) Which of the following is not an example of a social regulatory agency?
A. Consumer Product Safety Commission.
B. Equal Employment Opportunity Commission.
C. National Highway Traffic Safety Administration.
D. National Labor Relations Board.
Difficulty: Hard
40. (p. 185) An example of a regulatory agency charged with enforcing social regulation is:
A. Federal Aviation Administration.
B. Federal Trade Commission.
C. Federal Communications Commission.
D. Internal Revenue Service.
Difficulty: Hard
41. (p. 186) Total social regulation costs are:
A. Slightly higher than total economic regulation costs.
B. Slightly less than total economic regulation costs.
C. Significantly higher than total economic regulation costs.
D. Equal to total economic regulation costs.
Difficulty: Medium
42. (p. 188) Deregulation is often:
A. A politically popular idea.
B. A politically unpopular idea.
C. Seen during a Democratic federal administration.
D. Found in European countries but not in the United States.
Difficulty: Easy
43. (p. 188) Deregulation has occurred in the following industries:
A. Commercial airlines, sheet metal, and interstate trucking.
B. Commercial airlines, railroads, and financial institutions.
C. Commercial airlines, interstate trucking, and silicon chip manufacturing.
D. Financial institutions, railroads, and silicon chip manufacturing.
Difficulty: Hard
44. (p. 188) Reregulation is:
A. The adoption of regulation in another country to promote trade.
B. Necessary since all regulation has a time limit.
C. The increase or expansion of government regulation.
D. The shifting of regulation to the state level from the national level.
Difficulty: Medium
45. (p. 189) In 2008 two new global regulations to reduce injuries from accidents by better safety glazing of windows and mandating more geometric fitting head restraints in all vehicles were adopted by the:
A. United Nations.
B. European Commission.
C. National Transportation and Safety Board.
D. World Forum for Harmonization of Vehicle Regulations.
Difficulty: Hard
46. (p. 173 - 175) How do governments seek to cooperate with or work at arm's length with business? Does it matter whether the government is legitimately elected or has illegitimately acquired power?
Answer will vary
47. (p. 175 - 178) Define each key element of public policy process and provide an illustration or example for each element.
Answer will vary
48. (p. 178 - 180) Compare and contrast economic policies with social assistance policies.
Answer will vary
49. (p. 180 - 181) Identify and compare the four reasons why governments turn to regulation as a way to solve their problems.
Answer will vary
50. (p. 181 - 186) Government regulations come in different forms. Discuss the major types of government regulations of business.
Answer will vary
51. (p. 186 - 189) What could the United States government do about the out of control costs of regulation and the staffing of regulatory agencies in the United States?
Answer will vary
52. (p. 189 - 190) Why does international regulation occur? Discuss the conditions that affect the regulation of business in a global context.
Answer will vary