Deck 11: Business, Government, and Regulation.

Question 1

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

Answer 1

False

Question 2

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

Answer 2

False

Question 3

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

Answer 3

False

Question 4

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

Question 5

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

Question 6

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

Question 7

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

Question 8

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

Question 9

Deregulation has provided uniform benefits for all parties affected.

Question 10

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

Question 11

Keeping people informed is an important social goal of government.

Question 12

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

Question 13

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

Question 14

The level of government regulation of business has always been low.

Question 15

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

Question 16

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

Question 17

Newer social regulations covers business practices in all industries.

Question 18

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

Question 19

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

Question 20

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

Question 21

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 22

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

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

Question 23

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 24

There has always been a strong reaction in the United States to any form of industrial policy because:

A) It reduces the market's efficiency.
B) It conflicts with the widely held view of government's role in the economy.
C) Existing attempts to form industrial policies have generally been irrational and uncoordinated.
D) Industrial policies violate anti-trust legislation.

Question 25

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 26

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 27

The opposite of privatization could be considered

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

Question 28

Business generally follows the ethic of

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

Question 29

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 30

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 31

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 32

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 33

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 34

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 35

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 36

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 37

When it comes to the government business relationship, the public thinks:

A) the government is doing too much.
B) the government is doing too little.
C) the government needs to adapt to new realities.
D) All of these.

Question 38

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 39

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 40

Government is generally thought to follow the ethic of

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

Question 41

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 42

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 43

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 44

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 45

Negative externalities are often referred to as

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

Question 46

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 47

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 48

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 49

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 50

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 51

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 52

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 53

Direct costs of regulation are most visible when we look at the number of new agencies created, aggregate expenditures, and

A) global influence.
B) growth patterns.
C) community response.
D) resource spending.

Question 54

A 2015 Pew research survey found over 50% of respondents thought that the federal government was doing well in all areas except

A) responding to national disasters.
B) ensuring safe food and medicine.
C) corporate bailouts.
D) ensuring access to education.

Question 55

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

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

Question 56

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 57

Governmental regulations that seek to further societal objectives are examples of

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

Question 58

Government payments to industries or groups with special qualifications are called

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

Question 59

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 60

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 61

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 62

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

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

Question 63

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 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

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 66

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 67

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

Question 68

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 69

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 70

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 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.
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 72

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 73

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 74

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 75

The newer form of industrial policy is exemplified by:

A) a focus on enabling industrialization.
B) Karl Aiginer's book, "Industrial Policy: A Dying Breed or a Re-emerging Phoenix?"
C) policy that does not conflict with widely held view on the role of government in the economy.
D) Robert Reich's book, "The Next American Frontier."

Question 76

Provide a short answer to each of these questions. Be sure to fully explain your answer.
Is privatization always effective or successful? Give examples of a success and a failure.

Question 77

Arguments against privatization include all of these except:

A) social goals.
B) service provisions.
C) public backlash.
D) safety concerns.

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.
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 79

A 2015 Pew research survey found that respondents think the government is doing well on many issues except

A) setting workplace standards.
B) protecting the environment.
C) keeping us safe from terrorists.
D) cutting corporate taxes.

Question 80

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.