Chapter 08 - Business-Government Relations

Business and Society Stakeholders Ethics Public

Policy 14th Edition Lawrence
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True/False

1. Government and business together establish the regulatory rules under which business operates in
society.
Answer: F
Page: 160

2. In Europe, unions are prohibited by law to be on businesses’ administrative boards.

Answer: F
Page: 162

3. A cooperative government-business relationship on one issue does not guarantee cooperation on

another issue.
Answer: T
Page: 162

4. Public policy is a plan of action undertaken by business to influence the government.

Answer: F
Page: 164

5. In non-democratic countries, the power of government may derive from a monarchy, military
dictatorship, or religious authority.
Answer: T
Page: 165

6. Public policy effects are always unintended consequences of an action.

Answer: F
Page: 166

7. Monetary policies refer to policies that affect the supply, demand and value of the nation’s
currency.
Answer: T
Page: 168

8. A national health care policy is an example of an economic policy.

Answer: F
Page: 168

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Chapter 08 - Business-Government Relations

9. Economic regulations aim at modifying the normal operations of the free market and the forces of
supply and demand.
Answer: T
Page: 170

10. Predatory pricing is a violation of antitrust laws.

Answer: T
Page: 171

11. Cost-benefit analysis is often used to determine the costs of regulation.

Answer: T
Page: 175

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Chapter 08 - Business-Government Relations

12. Regulatory activity often is cyclical.

Answer: T
Page: 177

13. Regulation cannot be applied to international business behavior.

Answer: F
Page: 178

14. Sometimes national leaders resist the notion of international regulation, seeking to control
matters of commerce themselves within their own countries.
Answer: T
Page: 179

15. The United Nations oversees all international agreements concerning regulations between
nations.
Answer: F
Page: 179

Multiple Choice

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.
Answer: A
Difficulty: Easy
Page: 160

17. Which car company did not seek bailout loans from the U.S. government following the 2009
worldwide economic recession?
A. Toyota.
B. General Motors.
C. Chrysler.
D. Ford.
Answer: D
Difficulty: Easy
Page: 161

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.
Answer: D
Difficulty: Medium
Page: 162

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Chapter 08 - Business-Government Relations

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.
Answer: B
Difficulty: Medium
Page: 162

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.
Answer: C
Difficulty: Medium
Page: 162 – 164

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.
Answer: A
Difficulty: Hard
Page: 162

22. When a government orders companies not to conduct business in another country because of a
war, human rights violations, or lack of a legitimate government; these orders are called:
A. Government bailouts.
B. Political sanctions.
C. Economic sanctions.
D. Government stop-orders.
Answer: C
Difficulty: Easy
Page: 164

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.
Answer: B
Difficulty: Medium
Page: 164

24. Past decisions of the courts, the original basis for the U.S. legal system, are called:
A. Torts.
B. Amendments.
C. Legitimate actions.
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Chapter 08 - Business-Government Relations

D. Common laws.
Answer: D
Difficulty: Hard
Page: 165

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.
Answer: C
Difficulty: Medium
Page: 165

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.
Answer: A
Difficulty: Easy
Page: 165

27. Studies show that texting while driving is:

A. Less dangerous than talking on a phone while driving.
B. Less dangerous than driving while drunk.
C. More dangerous than talking on the phone while driving.
D. Just as dangerous as talking on a phone while driving.
Answer: C
Difficulty: Easy
Page: 165

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.
Answer: C
Difficulty: Medium
Page: 166

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.
Answer: D
Difficulty: Easy
Page: 167
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Chapter 08 - Business-Government Relations

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.
Answer: A
Difficulty: Hard
Page: 167

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
Answer: C
Difficulty: Medium
Page: 167

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.
Answer: B
Difficulty: Medium
Page: 167

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.
Answer: D
Difficulty: Medium
Page: 168

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.
Answer: D
Difficulty: Hard
Page: 168

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Chapter 08 - Business-Government Relations

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.
Answer: C
Difficulty: Easy
Page: 168

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.
Answer: A
Difficulty: Hard
Page: 169

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.
Answer: B
Difficulty: Hard
Page: 170

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.
Answer: D
Difficulty: Medium
Page: 170

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.
Answer: D
Difficulty: Hard
Page: 174

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.
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Chapter 08 - Business-Government Relations

Answer: B
Difficulty: Hard
Page: 174

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.
Answer: C
Difficulty: Medium
Page: 175

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.
Answer: A
Difficulty: Easy
Page: 177

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.
Answer: B
Difficulty: Hard
Page: 177

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.
Answer: C
Difficulty: Medium
Page: 177

45. In 2012 the European Union imposed a carbon emissions fee on all airlines flying in and out of
EU airspace that:
A. Successfully raised funds through fees to limit greenhouse gas emissions.
B. Garnered great support from the Chinese and U.S. governments.
C. Generated great opposition from more than two dozen countries.
D. Effectively eliminated green house gas emissions in its airspace.
Answer: C
Difficulty: Hard
Page: 178

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Chapter 08 - Business-Government Relations

Short Answer Questions

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?
Page: 162 – 164

47. Define each key element of public policy process and provide an illustration or example for each
element.
Page: 165 – 167

48. Compare and contrast economic policies with social assistance policies.
Page: 167 – 168

49. Identify and compare the four reasons why governments turn to regulation as a way to solve their
problems.
Page: 169 – 170

50. Government regulations come in different forms. Discuss the major types of government
regulations of business.
Page: 170 – 173

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?
Page: 175 – 177

52. Why does international regulation occur? Discuss the conditions that affect the regulation of
business in a global context.
Page: 178 – 179

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