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ANS:
Answer not provided.
PTS: 1 REF: p. 9 OBJ: 1-2 NAT: AACSB: Analytic

TOP: Business: A Definition
6. Explain how the notion of scarcity is related to personal as well as business decision making.
ANS:
PTS: 1 REF: p. 12 OBJ: 1-3

NAT: AACSB: Reflective Thinking TOP: Types of Economic Systems
7. Explain how the basic economic questions are answered in capitalistic and command economies.
ANS:
PTS: 1 REF: p. 13-17 OBJ: 1-3

8. Why do we say that the U.S. economy is a mixed economy?
ANS:
PTS: 1 REF: p. 15 OBJ: 1-3

9. How does socialism differ from communism?
ANS:
PTS: 1 REF: p. 16-17 OBJ: 1-3

10. Why is productivity important? How can a nation's productivity rate be improved?
ANS:
PTS: 1 REF: p. 17 OBJ: 1-4

NAT: AACSB: Reflective Thinking TOP: Measuring Economic Performance
11. What is real gross domestic product, and how does it differ from gross domestic product?
2
© 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
ANS:
PTS: 1 REF: p. 18 OBJ: 1-4 NAT: AACSB: Communication

TOP: Measuring Economic Performance
12. A nation's economy fluctuates instead of growing at a steady pace every year. These fluctuations are
generally referred to as the business cycle. Describe the four different phases of the business cycle.
ANS:
PTS: 1 REF: p. 20-21 OBJ: 1-4

NAT: AACSB: Reflective Thinking TOP: Measuring Economic Performance
13. What is the difference between monetary policies and fiscal policies? How does each affect the
nation's economy?
ANS:

14. In perfect competition, who sets the price of a product?
ANS:

TOP: Types of Competition
15. Describe how supply and demand affect the price of a product.
ANS:

16. In a monopolistic competition setting, how can a manufacturer differentiate a product?
ANS:

3
17. How does a monopoly have complete control over the price of its product?
ANS:
PTS: 1 REF: p. 24 OBJ: 1-5 NAT: AACSB: Communication

18. What effect did the Industrial Revolution and the golden age of invention have on the development of
American business?
ANS:
PTS: 1 REF: p. 24-26 OBJ: 1-6 NAT: AACSB: Analytic

TOP: American Business Today
19. What do you consider the most important challenges that American business faces today?
ANS:
PTS: 1 REF: p. 29 OBJ: 1-6

NAT: AACSB: Reflective Thinking TOP: American Business Today
MULTIPLE CHOICE
Satellite Communications
Jonathan worked for Satellite Communications for twenty years. In the time that he worked there, he
learned a lot about the company and how it operated. The company met its sales and revenue goals
every year. However, most of the employees had similar educational and cultural backgrounds. He
believed that the company could do much better if it cultivated an environment that promoted many
different ideas. Additionally, Satellite Communications was mostly focused on how much revenue it
earned in a given year. Jonathan felt that the most important goal should be to satisfy customers. He
believed financial success would result from focusing on customers.
After a lot of consideration, Jonathan decided to open his own business called Universal
Communications and hire employees that reflected a more diverse customer base. He was happy to
have this opportunity because it was a dream that he had always had. He had always wanted to make
his own decisions about what his company would produce and how. The only aspect of the business he
was unsure of was pricing, yet he knew this would be important for his ultimate success.
20. Refer to Satellite Communications. Jonathan is operating in a ____ because he has the opportunity to
decide what and how to do things.
a. command economy
b. mixed economy
c. free-enterprise system
d. split economy
e. cultural diversity
ANS: C PTS: 1 DIF: Mod. REF: p. 4
OBJ: 1-1 NAT: AACSB: Analytic TOP: Scenario Questions
21. Refer to Satellite Communications. When hiring people, Jonathan thinks it is important to consider
a. unilateral thinking.
b. profit.
c. wage increases.
d. health benefits.
e. cultural diversity.
ANS: E PTS: 1 DIF: Easy REF: p. 6
OBJ: 1-1 NAT: AACSB: Reflective Thinking TOP: Scenario Questions
22. Refer to Satellite Communications. Which company has the correct objective?
a. Satellite Communications
b. Universal Communications
c. Both of them
d. None of them
e. Not enough information is provided.
ANS: B PTS: 1 DIF: Mod. REF: p. 10
23. Refer to Satellite Communications. Now that Jonathan plans to open his own business, he needs to
look at the factors of production. Which of the following is not a factor of production?
a. Labor
b. Capital
c. Machinery
d. Demand
e. Entrepreneurship
ANS: D PTS: 1 DIF: Diff. REF: p. 12-13
24. Refer to Satellite Communications. Jonathan's success will contribute to society. This is referred to as
the
a. objective.
b. market economy.
c. business cycle.
d. invisible hand.
e. standard of living.
ANS: D PTS: 1 DIF: Diff. REF: p. 14
Home Inspirations
Hailey works for her father in a family-owned business called Home Inspirations, a bedding company
that has been in operation since the 1800s. When her father retires, Hailey plans on taking over the
business. Hailey is aware of many things about the company that she likes, and a few things that she
does not. She has particularly noted that when the economy has low unemployment and high total
income, sales are great. However, any other time, sales are not so good.
Currently, all of the bedding items are created in one place and everyone works on various tasks every
day. Hailey is thinking about streamlining the production process so that individuals would be
responsible for only one task. She believes that if production would increase, she could sell her
products at a lower price and increase revenue. She knows that most bedding products available in the
market are very similar in nature and satisfy the same need. However, if she were able to lower prices,
this might give her company the competitive advantage that it needs. She would then be able to invest
money in differentiating her products by providing unique features, building the brand name, and
offering services such as free delivery. She is also considering selling her products on the Internet.
Hailey knows that her father does not like change very much, but she feels these changes are important
for the future of the company.
25. Refer to Home Inspirations. Hailey noticed that when sales were up, the economy was in a
a. depression.
b. peak period.
c. grace period.
d. recession.
e. stagnant mode.
26. Refer to Home Inspirations. Home Inspirations currently operates in a ____ environment.
a. purely competitive
b. demand
c. monopolistic
d. command
e. supply
27. Refer to Home Inspirations. Hailey feels that for productivity to improve, the company must practice
a. free enterprise.
b. work ethics.
c. specialization.
d. cultural diversity.
e. pure competition.
ANS: C PTS: 1 DIF: Easy REF: p. 23
28. Refer to Home Inspirations. Hailey's goal of offering products with unique features and special
services is called
a. specialization.
b. product differentiation.
c. barter.
d. a factory system.
e. a natural monopoly.
ANS: B PTS: 1 DIF: Easy REF: p. 23
29. Refer to Home Inspirations. Which of these statements is true?

a. Hailey feels that e-business is an important avenue to venture into.
b. Home Inspirations is in a depressive economy.
c. Hailey feels that the barter system is working well.
d. The economy has a high standard of living.
e. The company's sales are obviously in equilibrium.
ANS: A PTS: 1 DIF: Diff. REF: p. 26
30. Amazon.com has the following rights: to make a profit for its stockholders; to market a wide variety of
products; and, to compete with other online retailers. Amazon.com operates in a(n) ____ system.
a. free-enterprise
b. domestic
c. e-business
d. socialistic
e. totalitarian
ANS: A PTS: 1 DIF: Mod. REF: p. 4
7
OBJ: 1-1 NAT: AACSB: Analytic
TOP: Your Future in the Changing World of Business
31. When an individual chooses his or her ideal career, it is most likely a reflection of one's
a. values.
b. hobbies.
c. skills.
d. education.
e. desire to be rich.
ANS: A PTS: 1 DIF: Easy REF: p. 6
OBJ: 1-1 NAT: AACSB: Reflective Thinking
32. Chris chooses to work only thirty hours a week as an engineering assistant while trying to shield
himself from additional responsibilities at work. Chris seems to value
a. recognition and rewards.
b. the opportunity to help others.
c. promotions and transfers.
d. more free time.
e. get-rich-quick schemes.
ANS: D PTS: 1 DIF: Easy REF: p. 6
33. Of the following, which is not considered a basic management function necessary to be an effective
manager?
a. Planning
b. Organizing
c. Leading and motivating
d. Controlling
e. Selling
ANS: E PTS: 1 DIF: Mod. REF: p. 7
34. Cultural diversity represents

a. a business theory that is no longer valid.
b. the differences among people in a workforce.
c. a technical skill.
d. a statistical method used to project sales revenues and profits for global companies.
e. a religious issue that doesn't affect business organizations.
8
OBJ: 1-1 NAT: AACSB: Diversity
35. Shawn Sine decides to start his own business. How likely is Shawn to still be operating a successful
business in seven years?
a. It depends on whether it is an e-business or not.
b. It is very likely because most small businesses are successful.
c. It is likely because the chance of failure is nearly equal to the chance for success.
d. It is unlikely because over half of all new small businesses fail.
e. It is very unlikely because almost all new businesses fail within the first three years.
36. According to Internet entrepreneur Mark Cuban,

a. e-business is a passing fad.
b. there is no need for a dot.com company to worry about competition.
c. many companies will fail over the next ten years if they don't provide something their
customers want.
d. there is no need for managers of dot.com companies to worry about meeting customer
needs.
e. there is no need to evaluate a high-tech company because almost all dot.com companies
are profitable.
37. The ability for a manager to think in abstract terms while envisioning the “big picture” falls into the
category of _____, deemed an important management trait.
a. interpersonal skills
b. conceptual skills
c. leading and motivating functions
d. mechanical skills
e. controlling functions
38. The organized effort of individuals to produce and sell, for a profit, the goods and services that satisfy
societies needs is called
a. consumerism.
b. the economy.
c. capitalism.
d. business.
e. the workplace.
OBJ: 1-2 NAT: AACSB: Analytic TOP: Business: A Definition
39. Raw materials, buildings, and machinery are ____ resources.

a. human
b. financial
c. information
d. major
e. material
40. All of the following are material resources for Toyota Motor Company except
a. paint.
b. steel.
c. factory.
d. tires.
e. money.
41. ____ resources include the funds needed to pay wages, purchase raw materials, and operate a business.
a. Human
b. Financial
c. Information
d. Major
e. Material
42. ____ resources are the individuals who provide labor for an organization in exchange for wages.
a. Human
b. Material
c. Labor
d. Financial
e. Informational
43. The monetary contributions that the owners of IBM pay for shares of the company's stock are ____
resources for IBM.
10
a. material
b. financial
c. informational
d. human
e. manufacturing
44. What resource tells the managers of a business how effectively the other three resources are being
combined and used?
a. Technical
b. Human
c. Financial
d. Material
e. Informational
45. Organizations that combine raw materials, machinery, and labor to produce goods are called
a. manufacturing businesses.
b. service businesses.
c. merchandisers.
d. market intermediaries.
e. processors.
46. Which of the following companies is an example of a manufacturer?

a. Best Buy
b. Intel
c. Walmart
d. AIG
e. Broadcast.com
47. Mondell Weller decides to start a residential landscaping business. How would this business most
likely be classified?
a. Manufacturing business
b. Marketing intermediary
c. Service business
d. Corporation
e. Nonprofit organization
ANS: C PTS: 1 DIF: Diff. REF: p. 10
11
48. A business’ efforts to sustain the planet and their participation in ecological movements are part of a
firm’s
a. free enterprise system.
b. stakeholder responsibilities.
c. factors of production.
d. social responsibility.
e. business cycle.
49. Best Buy stores would most likely be classified as

a. service businesses.
b. sole proprietorships.
c. a marketing intermediary.
d. manufacturing establishments.
e. perfect competition.
50. A local retailer calls its customers when it receives merchandise that they may be interested in,
provides individual service to each customer, provides forms and phone numbers for complaints and
comments, and has a 100 percent satisfaction guarantee. Which objective is this business working hard
to accomplish?
a. Making a profit
b. Achieving low employee turnover
c. Satisfying the needs of its customers
d. Increasing the owner's wealth
e. Keeping up with the current technology
51. The ultimate objective of every firm, such as IBM, Hewlett-Packard, JC Penney, and Cengage
Learning, must be to
a. sell either to other firms or to consumers.
b. satisfy the needs of its customers.
c. pay out money to cover the various expenses of doing business.
d. know that people generally buy a product and store it.
e. make it impossible to satisfy customers.
12
ANS: B PTS: 1 DIF: Diff. REF: p. 10
52. In the mid-1970s, American auto manufacturers produced big gas-guzzling cars and tried to sell them
to consumers who needed fuel-efficient transportation. This happened because manufacturers
a. lost sight of consumers' needs.
b. attempted to satisfy consumers' needs.
c. followed consumers' wants too closely.
d. knew the economy would rise again.
e. did not expect a profit.
53. When a firm's sales revenues are greater than its expenses, the firm has a
a. profit.
b. loss.
c. positive cash flow.
d. financial resource.
e. factor of production.
54. When a firm's expenses are greater than its sales revenue, the firm has a
a. profit.
b. loss.
c. negative cash flow.
d. recession.
e. depression.
55. The relationship between sales and profits can be written as

a. sales revenues + expenses = profit.
b. loss + profit = sales revenue.
c. profit  expenses = sales revenue.
d. expenses + loss = sales revenue + profit.
e. sales revenue  expenses = profit.
13
56. During 2011, Just-The-One Jewelry had sales revenues of $1,500,000. This retailer also had expenses
that totaled $800,000. What is the firm's profit or loss amount?
a. $2,300,000
b. $1,500,000
c. $800,000
d. $700,000
e. It is impossible to calculate profit or loss with the above information.
ANS: D PTS: 1 DIF: Mod. REF: p. 11
57. Andrew Cooper decides to become a part owner of a corporation. As a part owner, he expects to
receive a profit as payment because he has assumed the risk of
a. serious inflation eroding the purchasing power of his investment.
b. being paid before the suppliers and employees are paid.
c. losing his home, car, and life savings.
d. losing the money he has invested in the corporation and not receiving profits.
e. the company giving all of the profits to local communities.
58. At the end of the year, an individual, small business owner has made $65,000 in profit. Who does that
profit belong to?
a. The company's CEO and top managers
b. The banks from which the business borrowed money
c. All employees of the small business
d. The consumers of the business’ products
e. The owner of the business
59. For a business, stakeholders represent

a. investors in the business.
b. lenders that have provided loans.
c. suppliers that have extended credit to the firm in search of profit for the firm..
d. employees who work for the firm.
e. all of the different people or groups who are affected by the business.
60. ____ is the study of how wealth is created and distributed.
14
a. Economics
b. Business
c. Marketing
d. Capitalism
e. Finance
OBJ: 1-3 NAT: AACSB: Analytic TOP: Types of Economic Systems
61. Microeconomics is the study of

a. global economies.
b. the entire U.S. economy.
c. the decisions made by individuals.
d. the national unemployment rate.
e. productivity in other countries.
62. The study of an individual's economic decisions would be an example of

a. macroeconomics.
b. microeconomics.
c. fiscal policy.
d. monetary policy.
e. national economic policy.
63. When economists study the national economy or global economy, they are using a ____ approach.
a. macroeconomics
b. microeconomics
c. fiscal
d. monetary
e. intuitive
64. According to economists, natural resources, labor, capital, and entrepreneurship are called
a. free resources.
b. competitive resources.
c. factory resources.
d. factors of manufacturing.
e. factors of production.
ANS: E PTS: 1 DIF: Easy REF: p. 12-13
65. A natural resource, as recognized by economists, would include which of the following?
15
a. Crude oil
b. Buildings
c. Tools
d. Machinery
e. Equipment
66. The work performed to produce goods and services is referred to as

a. land.
b. financial resources.
c. material resources.
d. capital goods.
e. labor.
67. Matt Newell, a former Air Force pilot, decides to operate a helicopter tour company to provide
customers with breathtaking views of the Rocky Mountains. He obtains a loan and purchases the
necessary land, facilities, advertising, and five helicopters for his business. What important factor of
production has he overlooked in creating his business?
a. Equipment
b. Capital
c. Labor
d. Entrepreneurship
e. Natural resources
68. Capital or capital goods as recognized by economists would include all of the following except
a. crude oil.
b. facilities.
c. money.
d. machinery.
e. computer equipment.
69. Steve Wilson, a chef at a major restaurant in San Francisco, wants to start his own restaurant. He
surveys the market, finds a suitable location, and calculates how much money he will need to lease the
building and purchase the necessary equipment and supplies. Steve visits his banker and requests a
loan. The money Steve will receive from the loan and the resources he will purchase with it are known
as
a. capital.
b. profit.
16
c. revenue.
d. collateral.
e. stock.
70. For a Pepperidge Farm production facility, managers and employees would be
a. natural resources.
b. capital.
c. information resources.
d. labor.
e. the entrepreneurial resource.
71. A person who risks his or her time, effort, and money to start and operate a business is called a(n)
a. free-market specialist.
b. entrepreneur.
c. intrapreneur.
d. competitor.
e. profit taker.
72. Diane is passionate about soccer and decides to open her own soccer sporting goods store. She invests
her money, time, and effort into making the store a success. Diane can be best described as a(n)
a. capitalist.
b. laborer.
c. corporate owner.
d. entrepreneur.
e. competitor.
73. Which of the following scenarios would best exemplify Adam Smith's view of best serving the
interests of society?
a. Individuals are selected to fill certain positions within the economy of their nation
according to the needs of the nation as a whole.
b. Markets are carefully regulated to ensure that all individuals within a nation are treated
fairly and charged standardized prices.
c. A country only has a limited amount of space for college students and uses a type of
lottery system to determine who gets these spaces.
d. Government scarcely exists in this country, and transactions are based on a system of
barter, or trading goods, for other goods.
17
e. Individuals in the country may pursue their own economic gain and self-interest by doing
whatever is best for them.
ANS: E PTS: 1 DIF: Diff. REF: p. 14
74. Which of the following is not a feature of laissez faire capitalism?

a. Competition
b. Guaranteed income
c. Private ownership of wealth
d. Economic freedom
e. Limited role of government
75. An economic system in which individuals and businesses make the decisions about what to produce
and what to buy, and the market determines how much is sold and at what prices, is called a ____
economy.
a. product
b. producer's
c. market
d. planned
e. command
76. Olan Okowo recently moved to the United States with many hopes and dreams. However, he realizes
that economic freedom includes all of the following except the right to
a. guaranteed economic success.
b. use owned resources to produce a profit.
c. accept or reject any job offered.
d. sell a product at the price chosen.
e. buy any economic good or service producers sell.
77. In Adam Smith's view, which of the following is not the role of government in business?
a. Providing defense against foreign governments
b. Regulating business activity
c. Ensuring internal order
d. Furnishing public works
e. Providing education
18
78. The United States, whose economy exhibits elements of both capitalism and socialism, has what is
known as a ____ economy.
a. planned
b. utilitarian
c. nationalized
d. mixed
e. centralized
79. All of the following would typically be considered consumer products except a
a. 2-liter of Coke.
b. DVD player.
c. prom dress.
d. high-powered drill press.
e. bag of dog food.
80. Approximately what portion of our nation's total production is made up of consumer goods?
a. 70 percent
b. 50 percent
c. 40 percent
d. 20 percent
e. 10 percent
81. Which of the following represents the biggest customer of American business?
a. Government
b. Other businesses
c. Foreign governments
d. Consumers
e. The military
82. Households provide all of the following resources to businesses except

a. labor.
b. land.
19
c. dividends.
d. buildings.
e. capital.
83. Ways in which consumers affect American business include all the following except
a. purchasing goods and services.
b. providing necessary business capital.
c. providing the labor necessary for production.
d. providing the resources necessary for production.
e. taxing goods and services.
84. When consumers spend their money to purchase Amazon Kindles or computers with an Intel
processor, or when they discontinue buying such items as compact discs, they are telling resource
owners
a. how to produce.
b. for whom to produce.
c. what to produce.
d. when to produce.
e. to avoid faddish products.
85. Gail Nelson begins her first job after graduating from college and starts putting money away in a
savings account. She believes she has removed this money from the circular flow between buyers and
sellers that she studied in Introduction to Business. Is Gail correct?
a. Yes, by putting this money into a savings account, only she has access to the funds and
they are no longer available to the circular flow.
b. No, even though she has saved this money, the bank will in turn invest the money back
into the circular flow.
c. Yes, only direct investments into companies, such as purchasing ownership shares of that
company, will put her savings back into the circular flow.
d. Yes, the circular flow focuses on businesses and government, and therefore Gail's savings
have no impact on the circular flow.
e. No, because she earned this money from a company and because she paid taxes on it, it is
always considered part of the flow.
ANS: B PTS: 1 DIF: Diff. REF: p. 15-16
86. For the U.S. government to provide services, it collects revenue from
a. only individuals in the form of taxes.
b. only corporations in the form of taxes.
20
c. selling bonds to foreign governments.
d. both households and businesses in various forms of taxes.
e. selling manufactured goods overseas.
87. The government uses tax dollars to

a. invest in foreign bonds.
b. invest in foreign corporations.
c. purchase resources and products needed to provide services.
d. purchase other nations.
e. increase consumer income.
88. A system where the basic economic questions are determined, at least to some degree, through
centralized government planning is referred to as a ____ economy.
a. command
b. capitalistic
c. mixed
d. laissez-faire
e. communal
89. Examples of command economies include

a. socialism and free enterprise.
b. capitalism and socialism.
c. socialism and market economy.
d. communism and capitalism.
e. socialism and communism.
90. Susan Montgomery works at an institutional bakery and is paid a wage dictated by the government.
She does not like her job but is not allowed other options. Susan must purchase necessities for her
family at fixed prices. The country Susan lives in can be described as a ____ economy.
a. demand
b. command
c. market
d. free-enterprise
e. capitalist
ANS: B PTS: 1 DIF: Mod. REF: p.16-17
21
91. In a socialist economy, key industries owned by the government include all except
a. utilities.
b. communications.
c. food production.
d. banking.
e. transportation.
92. Tim Garner owns and operates his own small automobile repair shop. However, the prices he can
charge are fixed, and he rents his land and building from the government. Most of his friends work for
industries owned by the government. Tim's country is most likely a(n) ____ economy.
a. market
b. communist
c. socialist
d. industrialized
e. capitalist
93. Which of the following is uncharacteristic of a socialist economy?

a. All capital and capital goods are privately owned.
b. The government owns and controls key industries.
c. Land and raw materials may be the property of the state.
d. What to produce and how to produce it are based on national goals.
e. Distribution of goods and services is controlled by the state.
94. France, a socialist economy, does not have which of the following goals?
a. Equitable distribution of income
b. Elimination of poverty
c. Reduction of government regulations
d. Elimination of economic waste
e. Distribution of social services to all who need them
22
95. An example of a command economy is
a. capitalism.
b. laissez-faire.
c. oligopoly.
d. communism.
e. mixed economy.
ANS: D PTS: 1 DIF: Easy REF: p. 16-17
96. The nationalization of key industries in countries such as Sweden and India is indicative of a(n) ____
economy.
a. socialist
b. communist
c. capitalist
d. nationalist
e. industrialized
97. Which economist has been called the father of communism?

a. Adam Smith
b. Fidel Castro
c. Mark Cuban
d. Karl Marx
e. Alan Greenspan
98. In a communist country such as Cuba, emphasis is placed on producing what type of goods?
a. Goods needed by the government
b. Consumer goods
c. Goods for export
d. Perishable goods such as food
e. Durable goods such as machinery
23
99. Although changes have occurred over the years, ____ is historically considered to have a communist
economy.
a. Germany
b. Sweden
c. Norway
d. North Korea
e. Britain
100. All of the following are characteristics of communist countries such as Cuba except
a. intensive production of goods the government needs.
b. all workers contribute to society according to their ability.
c. frequent shortages of consumer goods.
d. government ownership of almost all economic resources.
e. an adequate supply of consumer goods.
101. Productivity can best be described as

a. a country's total output.
b. the efficiency of a company's operations.
c. economic growth in a country.
d. the average level of output per worker per hour.
e. the average level of output per worker per year.
102. The production and operations manager at a large shoe factory in Fall River, Massachusetts, notices
that the total number of hours worked by production employees has increased 12 percent, while the
number of pairs of shoes ready for shipping has dropped 6 percent this year over last year. This means
a. the inflation rate is unchanged.
b. the demand for shoes is decreasing.
c. the manager's calculations cannot be correct.
d. productivity has decreased.
e. the gross national product has increased by 6 percent.
24
103. All of the following except ____ are effects felt by individuals in regard to the health of a nation’s
economy.
a. the amount of interest paid for a home
b. acquiring a job
c. obtaining financing for your education
d. increases in productivity
e. the interest paid on credit card purchases
104. Which of the following situations is most likely to increase the United States' productivity?
a. Increased number of people in the workforce
b. Decreased production of goods
c. Increase in economic activity being transferred to the Internet
d. More corporations being split up into smaller divisions
e. More unemployment benefits
105. Which of the following statements is false?

a. One way to reduce costs is to increase productivity.
b. Increased productivity can lead to higher manufacturing costs.
c. Increased productivity is a concern for nations throughout the world.
d. Productivity is expected to improve as more economic activity is transferred to the
Internet.
e. Productivity growth enables American business firms to compete more effectively with
other nations in a competitive world.
106. To compare the productivity of the United States to that of Japan, one should examine their respective
a. defense budgets.
b. trade deficits.
c. gross domestic products.
d. stock markets' performance.
e. consumer price indices.
25
107. The total dollar value of all goods and services produced by all people within the boundaries of a
country is called
a. productivity.
b. gross domestic product.
c. gross national product.
d. inflation factor.
e. standard of living.
108. Which of the following would not be included in the gross domestic product of the United States?
a. Value of tax return services performed by H&R Block, U.S. locations
b. Value of BMW automobiles manufactured in Alabama
c. Total value of Procter & Gamble products produced in Michigan
d. Value of medical care services rendered in the United States
e. Value of McDonald's sales for their Tokyo locations
109. Which of the following economic terms describes the total value of a nation's goods or services that
have been adjusted for inflation?
a. Altered gross domestic product
b. Gross domestic product
c. Real gross domestic product
d. Altered gross national product
e. Gross national product
110. Due to the recent economic crisis, many employers were reluctant to hire new employees. As a result,
the unemployment rate hovered at approximately ____ for most of 2009 and 2010.
a. 7 percent
b. 8 percent
c. 10 percent
d. 12 percent
e. 13 percent
26
111. According to economists, inflation is
a. a general decrease in the level of prices.
b. a general rise in the level of prices.
c. unavoidable, and therefore something beyond the control of government.
d. eliminated by the government.
e. a general problem for countries with command economies.
112. Deflation
a. is a typical economic event in the U.S. economy.
b. is scheduled by the nation's economists to make economic corrections.
c. occurs only in command economies.
d. is a general decrease in the level of prices.
e. is characteristic of a mixed economy.
113. An executive at a U.S. steel company uses growth in gross domestic product as one way to develop
trends in industry steel use, so he records GDP change for each year on a graph. However, the
executive's figures are considerably higher than those of the staff economist, who also has drawn a
graph. This difference is most likely the result of
a. measurement errors by the U.S. Bureau of the Census.
b. a decline in gross domestic product.
c. an increase in gross domestic product.
d. the economist adjusting the figures for the inflation rate.
e. a change in productivity.
114. The consumer price index (CPI)

a. is a quarterly index that producers receive for their finished goods.
b. measures increases or decreases in the level of worker performance.
c. is the price of metals, lumber, and raw materials.
d. measures prices paid during periods of deflations.
e. is a monthly index that tracks the prices paid by consumers.
27
115. Which of the following is false in regard to the unemployment rate?
a. According to Bureau of Labor Statistics, the country loses goods and services that could
have been produced.
b. A nation benefits from unemployment due to a lower level of wages required to be paid by
employers.
c. According to the Bureau of Labor Statistics, families lose wages due to unemployment.
d. The unemployment rates is the percentage of a nation’s labor force that are not working at
any one time.
e. The purchasing power of unemployed workers is lost.
116. A furniture manufacturer like Thomasville would be concerned with the producer price index because
it
a. is related to the real gross domestic product.
b. measures prices that manufacturers must pay for lumber and other raw materials used in
the manufacturing process.
c. tracks the cost of housing and transportation.
d. is published daily.
e. measures the effect of interest rates on the economy.
117. The producer price index is an accurate predictor of

a. future changes in the consumer price index.
b. the level of unemployment.
c. prime interest rates.
d. Internet business activity.
e. an individual's standard of living.
118. Fluctuations in a nation's economy are referred to as its

a. economic upheaval.
b. inflation problem.
c. depression cycle.
d. business cycle.
e. recession period.
28
119. All except ____ are considered industries that cause the U.S. recession and economic crisis that began
in fall 2007.
a. home construction
b. the automobile industry
c. retail
d. banking
e. financial markets
120. All except ____ was a part of the U.S. federal government’s stimulus plan
a. Shore up the country’s banks
b. Create a more extensive physical infrastructure
c. Shore up Wall Street firms
d. Reduce the number of home foreclosures
e. Free up credit for individuals and businesses
121. Which of the following is not one of the four states included in a typical business cycle?
a. Repression
b. Peak
c. Recession
d. Trough
e. Recovery
ANS: A PTS: 1 DIF: Easy REF: p. 20-21
122. During which phase of the business cycle would a company like General Electric introduce new
products?
a. Repression
b. Peak
c. Recession
d. Depression
e. Recovery
29
123. Which of the following is not a characterization of a depression?
a. High unemployment rates
b. Lower stock values
c. two or more consecutive three-month periods of GDP decline
d. General decrease in business activity
e. General lack of confidence in the economy by members of the population
124. As Rachel Smith and her friends prepare to graduate from college, they are faced with numerous job
offers with starting salaries better than they could have imagined when they began college four years
ago. Based on this information, which stage of the business cycle would the economy be in?
a. Depression
b. Peak
c. Recession
d. Trough
e. Recovery
125. During which stage of the business cycle would a company such as 3M begin to focus on being more
value conscious in its production decisions?
a. Depression
b. Peak
c. Recession
d. Trough
e. Recovery
126. Economists define a ____ as two consecutive three-month periods of decline in a country's gross
domestic product.
a. repression
b. prosperity
c. recession
d. trough
e. recovery
30
127. The economic term used to describe the Federal Reserve's actions to determine the size of the supply
of money in the nation and the level of interest rates is
a. monetary policy.
b. fiscal policy.
c. debt policy.
d. recovery technique.
e. recovery guideline.
128. The Federal Reserve uses ____ when it lowers the interest rate charged to banks on short-term loans.
a. monetary policy
b. national debt
c. inflation
d. fiscal policy
e. competition
129. The economic term used to describe the government's influence on savings and changing the levels of
government spending is
a. monetary policy.
b. fiscal policy.
c. debt policy.
d. recovery technique.
e. recovery guideline.
130. In France, income taxes are reduced so that individuals will have more income to spend, which in turn
will stimulate the economy. This is an example of
a. the business cycle.
b. economic stimulation.
c. monetary policy.
d. recession.
e. fiscal policy.
31
131. When the U.S. government spends more than it receives within a fiscal year, this is called the
a. economic debt.
b. federal deficit.
c. fiscal debt.
d. national debt.
e. consumer debt.
132. The total of all federal deficits in the United States is called the
a. economic debt.
b. federal deficit.
c. fiscal debt.
d. national debt.
e. consumer debt.
133. Some economists believe that sound fiscal and monetary policy can reduce the amount of time the
economy is in the ____ stage of the business cycle.
a. recession
b. recovery
c. repression
d. prosperity
e. trough
134. Since World War II, the average length of recessions has been
a. six months
b. eleven months
c. twenty-two months
d. three years
e. five years
32
135. During which phase do high unemployment rates decline and levels of income increase?
a. Repression
b. Peak
c. Recession
d. Trough
e. Recovery
136. The rivalry among businesses for sales to potential customers

a. is an unfair business practice.
b. is a necessary part of a command economy.
c. is referred to as competition.
d. is typical in a communist nation.
e. doesn't exist in the real world.
OBJ: 1-5 NAT: AACSB: Analytic TOP: Types of Competition
137. For firms like Target and Walmart, competition

a. is not a factor that must be considered in a free-market economy.
b. affects smaller businesses but not large chain operations.
c. affects larger chain operations but not smaller businesses.
d. is a rivalry among businesses for sales to potential customers.
e. is a problem that has been eliminated in the twenty-first century.
138. Perfect competition is characterized by

a. many buyers and many sellers.
b. few buyers and few sellers.
c. few buyers and many sellers.
d. many buyers and few sellers.
e. a few companies that control the market.
139. ____ is a necessary and extremely important by-product of free enterprise.

a. Monopoly
b. Socialism
c. Communism
d. Competition
e. Poverty
33
140. As a farmer, Gary Forsythe is familiar with the economics of perfect competition. How is the price at
which he sells his corn determined?
a. It is determined by Gary because he has the product that many people want.
b. The price is determined by combining the actions of all buyers and all sellers together.
c. The price he will receive is primarily determined by the buyer at the local grain bin.
d. The government sets the price of the corn to level the playing field for everyone.
e. The price will be approximately 25 percent higher than what other farmers are selling the
same corn for because Gary is an astute businessperson.
141. If the demand for a product declines, what happens to the price of the product?
a. The price stays the same.
b. The price decreases.
c. The price increases.
d. The equilibrium price will be maintained.
e. The market price will be maintained.
142. As computers gained popularity, the ____ typewriters decreased along with the price.
a. demand for
b. supply of
c. equilibrium of
d. productivity of
e. monopoly associated with
143. As the price of jeans rises, Levi Strauss is likely to

a. decrease production and thus decrease the supply.
b. increase production and thus increase the supply.
c. do nothing to influence the available supply of jeans.
d. discontinue producing jeans in favor of a different product.
e. increase production to influence the demand for jeans.
34
144. A price at which the demanded quantity is equal to the produced quantity of that product is called the
____ price.
a. market
b. customer
c. equality
d. demand
e. supply
ANS: A PTS: 1 DIF: Easy REF: p. 22-23
145. Researchers just released the results of a study that shows eating fish at least four times a week
dramatically decreases adults' risk of heart disease. What will likely result from this new information?
a. The demand for fish will decrease.
b. The supply of fish will decrease, causing a decrease in the price.
c. The demand for fish will increase at every price.
d. The demand for fish will decrease at every price.
e. The demand for fish will likely remain the same, but the market price will adjust.
146. Monopolistic competition is a market situation in which

a. similar but not identical products are available.
b. only one product is available.
c. several identical products are available.
d. the same price is charged for all products.
e. the government regulates prices.
147. ____ is the process of developing and promoting the differences between one's products and other
similar products.
a. Advertising
b. Monopolistic competition
c. Product differentiation
d. Branding
e. Goods distinction
35
148. The maker of Hanes pantyhose attempts to set its product apart from the competition. As a result, the
company obtained limited control over the price of its product. Achieving price control in this manner
is known as
a. advertising.
b. distributional efficiency.
c. low-cost production.
d. niche marketing.
e. product differentiation.
149. Although all casual clothing ultimately provides the same purpose, companies such as The Gap strive
to make their brand seem unique from the many other brands available on the market. The market for
casual clothing can best be characterized as
a. pure competition.
b. monopolistic competition.
c. an oligopoly.
d. a monopoly.
e. a natural monopoly.
150. ____ is a market situation (or industry) in which there are few sellers.
a. Monopolistic competition
b. Pure competition
c. Monopoly
d. Oligopoly
e. Natural monopoly
151. Which of the following is not a characteristic of an oligopoly?

a. There are few sellers.
b. The seller has considerable control over price.
c. Any duplication of facilities is wasteful.
d. Sizable investments are required to enter the market.
e. The market actions of each seller can strongly affect other sellers.
ANS: C PTS: 1 DIF: Mod. REF: p. 23-24
36
152. Which of the following industries would most likely have the characteristics of an oligopoly?
a. Clothing
b. Restaurants
c. Automobiles
d. Cameras
e. Make-up
153. When General Mills and a few other firms dominate the American cereal market, this is an example of
a. pure competition.
b. monopolistic competition.
c. oligopoly.
d. natural monopoly.
e. monopoly.
154. Exxon/Mobil and Shell are two of the relatively few sellers in the oil-refining industry. Due to the
tremendous capital investment required to enter this industry, these companies are insulated
significantly from the threat of new competitive entrants and thus have considerable control over price.
This market situation is referred to as a(n)
a. cartel.
b. monopoly.
c. natural monopoly.
d. oligopoly.
e. trust.
155. When Toyota experienced declining sales as a result of quality and safety issues, it began offering
buyer incentives to new-car buyers. Nearly immediately, Ford and General Motors began similar
promotions. These businesses
a. represent an oligopoly in which there are few sellers, and each seller has considerable
control over price.
b. represent a monopoly in which only one firm supplies a product or products.
c. are engaging in monopolistic competition in which there are many buyers as well as a
relatively large number of sellers that differentiate their products from those of
competitors.
d. are engaging in pure competition, in which no single seller is powerful enough to affect
prices.
e. are engaging in monopolistic competition, in which the products are very similar.
ANS: A PTS: 1 DIF: Mod. REF: p. 23-24
37
156. A market or industry with only one seller is referred to as
a. a limited command system.
b. a monopoly.
c. an oligopoly.
d. monopolistic competition.
e. a perfect competitive market.
157. If all leading corporations in the soft-drink industry merged, this would
a. encourage pure competition.
b. encourage monopolistic competition.
c. lead to an oligopoly.
d. create a limited monopoly.
e. create a monopoly.
158. Public utilities are often referred to as

a. sole proprietorships.
b. monopolistic competitors.
c. monopolies.
d. oligopolies.
e. socialistic.
159. What must a monopoly, such as a public utility, account for when setting its prices?
a. A monopoly, because it has no competitors, can set prices as high as it likes.
b. A monopoly must consider customer demand, and then set prices at the most profitable
level.
c. A monopoly must take into account what its top competitors are charging for the same
product or service.
d. A monopoly has no say in what prices it will charge because the government sets the
prices for all monopolistic industries.
e. A monopoly must look at the importance of each client, and then determine what
respective rate each will be charged.
160. Bowflex, Inc., which manufactures total strength training systems for home use, obtained a patent on
its power rods. Bowflex has a(n) ____ for this product.
a. monopoly
b. oligopoly
c. natural monopoly
38
d. limited monopoly
e. illegal monopoly
161. When Microsoft copyrighted its Windows software, it established a(n) ____ monopoly.
a. domestic
b. international
c. legal
d. natural
e. unnatural
162. ____ is a loose, subjective measure of how well off an individual or society is in terms of obtaining
want-satisfying goods and services.
a. Employment success
b. Standard of wealth
c. Standard of living
d. Economic satisfaction
e. Satisfaction economic factor
OBJ: 1-6 NAT: AACSB: Analytic TOP: American Business Today
163. American Airlines traded eight 747s for twelve DC-10s owned by United Airlines. This transaction is
an example of
a. barter.
b. ancient trading.
c. the domestic system.
d. the factory system.
e. an unequal exchange of goods.
164. The system in which raw materials are distributed by entrepreneurs to homes in which family members
process those materials into finished products is referred to as
a. the factory system.
b. an apprenticeship.
c. specialization.
d. free enterprise.
e. the domestic system.
39
165. Randall Newman distributes rawhide to several different homes. In turn, each household produces a
product such as satchels, belts, shoes, and boots, and then Randall sells the finished goods. This
represents a(n)
a. oligopoly.
b. domestic system.
c. system of specialization.
d. factory system.
e. barter system.
166. The use of the factory system in the United States helped to usher in the
a. colonial period.
b. Industrial Revolution.
c. Great Depression.
d. Renaissance.
e. twentieth century.
167. One of Samuel Slater's contributions to the development of American business was the use of
a. capital.
b. flexible manufacturing.
c. domestic robots.
d. the factory system.
e. the domestic system.
168. The separation of a manufacturing process into distinct tasks and the assignment of different tasks to
different individuals is called
a. specialization.
b. entrepreneurship.
c. free market.
d. barter.
e. factory manufacturing.
169. The Hamel family owns and operates an interior decorating business. Greg installs hardwood floors
and chair rails; Stephanie reupholsters furniture and takes care of the finances; Ryan designs and
makes draperies and pillows; and Allison coordinates the overall color, look, and design. The process
the Hamel family uses to run its business is
a. specialization.
b. division of service.
40
c. the factory system.
d. the domestic system.
e. the barter system.
170. The purpose of specialization is to

a. reduce productivity.
b. increase the efficiency of industrial workers.
c. boost the morale of an employee because he or she is special.
d. relieve boredom.
e. make the nature of the work more general.
171. Which of the following is not a characteristic of the Great Depression?

a. Stock prices decreased.
b. It was a period of misery and human suffering.
c. There was a near collapse of the nation's economy.
d. The government became less involved in business activities.
e. People lost faith in business and its ability to satisfy society's needs.
172. When did the U.S. government become more deeply involved in business than it had been previously?
a. In the early 1920s
b. After Franklin D. Roosevelt became president
c. After the Vietnam War
d. During the social responsibility movement during the 1960s
e. After the Korean War
173. All except ____ are considered important, major events that shaped the nation’s economy during the
period of 1940 to 2000.
a. the Korean War
b. the institution of Franklin D. Roosevelt’s federal government programs
c. the shortage of crude oil
d. high inflation with high interest rates and reduced business profits
e. the Vietnam War
41
174. In the early 1980s, David Jimenez, a corporate finance manager, was faced with which of the
following problems?
a. High inflation rates
b. Competition from e-business firms
c. Too much productivity
d. Declining interest rates
e. A decline in the use of specialization
175. The organized effort of individuals to produce and sell, for a profit, the products and services that
satisfy society's needs through the Internet is known as
a. business.
b. economy.
c. entrepreneurship.
d. e-business.
e. e-marketing.
176. Increased competition from firms in other nations is an example of the

a. technological environment.
b. global environment.
c. command environment.
d. laissez-faire environment.
e. mixed environment.
177. In the last decade of the century, ____ became a major force in the economy in regard to business.
a. reduced business profits
b. high interest rates
c. high inflation
d. the Internet
e. shortage of crude oil
42
178. The current technology environment
a. is not as important as it was fifteen years ago.
b. does not affect manufacturing firms.
c. changes the way business firms communicate with customers.
d. doesn't change as often as it did fifteen years ago.
e. is not a concern for most firms that do business only in the United States.
179. Which of the following statements does not describe the U.S. economy as we finish the first decade of
the new millennium?
a. Information technology will continue to fuel the new economy.
b. There will be more investment in information technology.
c. There will be fewer opportunities for international trade.
d. E-business will be a more important part of the economy.
e. Service businesses will continue to employ more than half of the American workforce.
180. The concept of sustainability focuses on which of the following?

a. The needs of the present without compromising the future
b. The needs of the future without compromising the present
c. The needs of the firm to make a profit in the present
d. The needs of future employees
e. The needs of the government in the future
181. Service businesses employ approximately ___ percent of the U.S. work force.
a. 40
b. 50
c. 65
d. 75
e. 85
ANS: E PTS: 1 DIF: Diff. REF: p. 27
43
182. Which of the following issues will not be a challenge for our economy in the years to come?
a. How can we encourage economic growth while conserving natural resources?
b. How can we preserve the benefits of competition?
c. How can we meet the challenges of managing a culturally diverse workforce?
d. How can individuals reinvest all the profits that have been made in the stock market as a
result of the strong economy?
e. How can we meet the needs of the less fortunate?
TRUE/FALSE
183. As the founder of an American business firm, Jeff Bezos can, within certain limits, produce and/or sell
any product he chooses and sell it at any price it sets.
ANS: T PTS: 1 DIF: Easy REF: p. 4

184. In our free-enterprise system, federal and state governments decide what products and services to
provide.
ANS: F PTS: 1 DIF: Mod. REF: p. 4

185. A working knowledge of our business system combined with technical skills can give an applicant an
advantage in looking for a job.

186. After getting her bachelor's degree in business, Mary Wilson realized she was much more productive
at her job than she had been before. Mary's degree helped her to become a better employee.

187. Today, managers and employees are no longer concerned about cultural diversity.
ANS: F PTS: 1 DIF: Easy REF: p. 6

44
188. Because e-businesses use the Internet, there is no need to meet the needs of their customers.

189. In order for a business to be successful, it must be organized, it must satisfy needs, and it must make a
profit.

190. The four resources that a business must use to operate successfully include material resources, human
resources, financial resources, and operational resources.

191. Generally there are three types of businessesmanufacturing businesses, service businesses, and
marketing intermediaries.

192. Sony is most correctly classified as a marketing intermediary type of business.
ANS: F PTS: 1 DIF: Mod. REF: p.10

193. People buy goods and services simply to own them.

194. The ultimate goal of every business firm should be to satisfy the needs of its customers.

195. If a firm's sales revenue exceeds its expenses, the firm has earned a profit.

196. Profit is the payment business owners receive for assuming the risks of ownership.
ANS: T PTS: 1 DIF: Mod. REF: p. 12

45
197. The term stakeholders refers only to the people who have invested money in a business.

198. Economics is the study of how wealth is created and distributed.

199. How the price of homes affects the number of homes built and sold would be an economic issue
studied in a Macroeconomics course.

200. Macroeconomists often study the effect of taxes, government spending, interest rates, and similar
factors on a nation's economy.

201. The factors of production include natural resources, labor, government assistance, and
entrepreneurship.
ANS: F PTS: 1 DIF: Mod. REF: p. 12-13

202. The four basic questions in a capitalist economy are what to produce, how to produce, who should
produce, and when to produce.

203. Adam Smith is the person who actually organized American business as we know it today.

204. According to Adam Smith, under laissez-faire capitalism, each person should be allowed to work
toward his or her own economic gain without government interference.

46
205. Adam Smith argued that the creation of wealth is a proper concern of government.

206. Adam Smith developed the concept of the invisible hand to explain how all economic activity should
be based on a nation's needs and not the individual's needs.
ANS: F PTS: 1 DIF: Diff. REF: p. 14

207. A market economy is sometimes referred to as a command economy.

208. The U.S. business system is commonly referred to as a mixed economy.

209. Consumer goods make up about one-third of our nation's gross national product.

210. Consumers exchange tax money to purchase goods and services.

211. A business provides goods and services in exchange for sales revenues.

212. When a business distributes profits to business owners, these profits become household income and are
removed from the circular flow of the economy.

213. The services that government provides would not be produced by private business firms or would be
produced only for those who could afford them.

47
214. The government uses taxes to purchase resources and products required to provide services.

215. Command economies include capitalism, socialism, and communism.

216. In a socialist economy, the key industries are owned and controlled by the government.

217. Karl Marx is known as the father of communism.

218. Productivity is the total output per worker per year.

219. Reducing costs and enabling employees to work more efficiently are at the core of all attempts to
improve productivity.

220. Fewer workers producing more goods and services can lead to higher overall employment rates.

221. Gross domestic product is a loose, subjective measure of how well a society can satisfy its people
through goods and services.

48
222. The terms real gross domestic product and gross domestic product can be used interchangeably.

223. Real gross domestic product is an economic measure that has been adjusted for price increases of
goods and services during a given period of time.

224. Inflation is a general rise in the level of prices experienced by people in a nation.

225. Deflation is a general decrease in the level of prices.

226. The consumer price index (CPI) and the producer price index (PPI) actually measure the same
economic factors.

227. The recurrence of periods of growth and recession in a nation's economic activity is a depression.

228. During the peak or prosperity stage of a nation's business cycle, businesses are reluctant to offer new
products and services.

49
229. Economists define a recession as two or more consecutive three-month periods of decline in a
country's gross domestic product.

230. A depression is a severe recession that lasts longer than a recession.

231. Monetary policies exert the government's influence on the amount of savings and expenditures by
altering the tax structure and changing the levels of government spending.

232. The national debt in the United States is about $12.7 trillion.

233. Basically, there are four recognized degrees of competition: perfect competition, monopolistic
competition, oligopoly, and monopoly.

234. Perfect competition is the market situation in which a product has many buyers and sellers, and no
single buyer or seller is powerful enough to affect a product's price.

235. As the price of a product increases, the amount of the product that a producer is willing to supply
increases.

236. As the price of a product increases, the amount of the product that consumers purchase increases.

50
237. The equilibrium or market price exists when the supply of a product exceeds the amount that
consumers are willing to purchase.
ANS: F PTS: 1 DIF: Mod. REF: p. 22-23

238. The products available in a monopolistically competitive market are similar in nature and are intended
to satisfy the same need.
ANS: T PTS: 1 DIF: Diff. REF: p. 23

239. An oligopoly is a market situation in which there is one producer and a few large buyers.

240. In a monopoly situation, there is no close substitute for the product or service.

241. A copyright of a product exists indefinitely.

242. A legal monopoly is often referred to as a natural monopoly.

243. A factory system of manufacturing involves the separation of a manufacturing process into separate
tasks and the assignment of different tasks to different employees.

244. Specialization is meant to increase the efficiency of industrial workers.

245. Typical service businesses in the U.S. include real estate, repair companies, and restaurants.

51
246. During the 1930s, government became deeply involved in business for the first time.

247. Because of technology and the Internet, the use of information by business managers has increased.

248. According to global experts, India is the fastest-growing economy in the world.

52
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CHAPTER XV
DEMOCRACY AND DISTINCTION
The Problem—Democracy Should be Distinguished from

Transition—The Dead-Level Theory of Democracy—
Confusion and Its Effects—“Individualism” May not be
Favorable to Distinguished Individuality—Contemporary
Uniformity—Relative Advantages of America and Europe
—Haste, Superficiality, Strain—Spiritual Economy of a
Settled Order—Commercialism—Zeal for Diffusion—
Conclusion.
What shall we say of the democratic trend of the modern world as
it affects the finer sort of intellectual achievement? While the
conscious sway of the masses seems not uncongenial to the more
popular and obvious kinds of eminence, as of statesmen, inventors,
soldiers, financiers and the like, there are many who believe it to be
hostile to distinction in literature, art or science. Is there hope for this
also, or must we be content to offset the dearth of greatness by the
abundance of mediocrity?
This, I take it, is a matter for a priori psychological reasoning rather
than for close induction from fact. The present democratic movement
is so different from anything in the past that historical comparison of
any large sort is nearly or quite worthless. And, moreover, it is so
bound up with other conditions which are not essential to it and may
well prove transient, that even contemporary fact gives us very little
secure guidance. All that is really practicable is a survey of the broad
principles at work and a rough attempt to forecast how they may
work out. An inquiry of this sort seems to me to lead to conclusions
somewhat as follows.
First, there is, I believe, no sound reason for thinking that the
democratic spirit or organization is in its essential nature hostile to
distinguished production. Indeed, one who holds that the opposite is
the case, while he will not be able to silence the pessimist, will find
little in fact or theory to shake his own faith.
Second, although democracy itself is not hostile, so far as we can
make out its nature by general reasoning, there is much that is so in
the present state of thought, both in the world at large and, more
particularly, in the United States.
In this, as in all discussions regarding contemporary tendency, we
need to discriminate between democracy and transition. At present
the two go together because democracy is new; but there is no
reason in the nature of things why they should remain together. As
popular rule becomes established it proves capable of developing a
stability, even a rigidity, of its own; and it is already apparent that the
United States, for instance, just because democracy has had its way
there, is less liable to sudden transitions than perhaps any other of
the great nations.
It is true that democracy involves some elements of permanent
unrest. Thus, by demanding open opportunity and resisting
hereditary stratification, it will probably maintain a competition of
persons more general, and as regards personal status more
unsettling, than anything the world has been used to in the past. But
personal competition alone is the cause of only a small part of the
stress and disorder of our time; much more being due to general
changes in the social system, particularly in industry, which we may
describe as transition. And moreover, competition itself is in a
specially disordered or transitional state at present, and will be less
disquieting when a more settled state of society permits it to be
carried on under established rules of justice, and when a
discriminating education shall do a large part of its work. In short,
democracy is not necessarily confusion, and we shall find reason to
think that it is the latter, chiefly, that is opposed to distinction.
The view that popular rule is in its nature unsuited to foster genius
rests chiefly on the dead-level theory. Equality not distinction is said
to be the passion of the masses, diffusion not concentration.
Everything moves on a vast and vaster scale: the facility of
intercourse is melting the world into one fluid whole in which the
single individual is more and more submerged. The era of salient
personalities is passing away, and the principle of equality, which
ensures the elevation of men in general, is fatal to particular
greatness. “In modern society,” said De Tocqueville, the chief
begetter of this doctrine, “everything threatens to become so much
alike that the peculiar characteristics of each individual will soon be
entirely lost in the general aspect of the world.”[75] Shall we agree
with this or maintain with Plato that a democracy will have the
greatest variety of human nature?[76]
Perhaps the most plausible basis for this theory is the levelling
effect ascribed by many to the facilities for communication that have
grown up so surprisingly within the past century. In a former chapter I
have said much upon this matter, holding that we must distinguish
between the individuality of choice and that of isolation, and giving
reasons why the modern facility of intercourse should be favorable to
the former.
To this we may add that the mere fact of popular rule has no
inevitable connection, either friendly or hostile, with variety and vigor
of individuality. If France is somewhat lacking in these, it is not
because she is democratic, but because of the race traits of her
people and her peculiar antecedents; if America abounds in a certain
kind of individuality, it is chiefly because she inherited it from
England and developed it in a frontier life. In either case democracy,
in the sense of popular government, is a secondary matter.
Certainly, America is a rather convincing proof that democracy
does not necessarily suppress salient personality. So far as
individuality of spirit is concerned, our life leaves little to be desired,
and no trait impresses itself more than this upon observers from the
continent of Europe. “All things grow clear in the United States,” says
Paul Bourget, “when one understands them as an immense act of
faith in the social beneficence of individual energy left to itself.”[77]
The “individualism” of our social system is a commonplace of
contemporary writers. Nowhere else, not even in England, I
suppose, is there more respect for non-conformity or more
disposition to assert it. In our intensely competitive life men learn to
value character above similarity, and one who has character may
hold what opinions he pleases. Personality, as Mr. Brownell points
out in contrasting the Americans with the French, is the one thing of
universal interest here: our conversation, our newspapers, our
elections are dominated by it, and our great commercial transactions
are largely a struggle for supremacy among rival leaders.[78] The
augmenting numbers of the people, far from obscuring the salient
individual, only make for him a larger theatre of success; and
personal reputation—whether for wealth, statesmanship, literary
achievement, or for mere singularity—is organized on a greater
scale than ever before. One who is familiar with any province of
American life, as for example, that of charitable and penal reform, is
aware that almost every advance is made through the embodiment
of timely ideas in one or a few energetic individuals who set an
example for the country to follow. Experience with numbers, instead
of showing the insignificance of the individual, proves that if he has
faith and a worthy aim there is no limit to what he may do; and we
find, accordingly, plenty of courage in starting new projects. The
country is full of men who find the joys of self-assertion, if not always
of outward success, in the bold pursuit of hazardous enterprises.
If there is a deficiency of literary and artistic achievement in a
democracy of this kind, it is due to some other cause than a general
submergence of the individual in the mass.
The dead-level theory, then, is sufficiently discredited as a general
law by the undiminished ascendency of salient individualities in
every province of activity. The enlargement of social consciousness
does not alter the essential relation of individuality to life, but simply
gives it a greater field of success or failure. The man of genius may
meet with more competition, but if he is truly great a larger world is
his. To imagine that the mass will submerge the individual is to
suppose that one aspect of society will stand still while the other
grows. It rests upon a superficial, numerical way of thinking, which
regards individuals as fixed units each of which must become less
conspicuous the more they are multiplied. But if the man of genius
represents a spiritual principle his influence is not fixed but grows
with the growth of life itself, and is limited only by the vitality of what
he stands for. Surely the great men of the past—Plato, Dante,
Shakespeare and the rest—are not submerged, nor in danger of
being; nor is it apparent why their successors should be.
The real cause of literary and artistic weakness (in so far as it
exists) I take to be chiefly the spiritual disorganization incident to a
time of rather sudden transition. How this condition, and others
closely associated with it, are unfavorable to great æsthetic
production, I shall try to point out under the four heads, confusion,
commercialism, haste and zeal for diffusion.
With reference to the higher products of culture, not only the
United States, but in some degree contemporary civilization in
general, is a confused, a raw, society, not as being democratic but as
being new. It is our whole newspaper and factory epoch that is
crude, and scarcely more so in America than in England or
Germany; the main difference in favor of European countries being
that the present cannot so easily be separated from the conditions of
an earlier culture. It is a general trait of the time that social types are
disintegrated, old ones going to pieces and new ones not perfected,
leaving the individual without adequate discipline either in the old or
in the new.
Now works of enduring greatness seem to depend, among other
things, on a certain ripeness of historical conditions. No matter how
gifted an individual may be, he is in no way apart from his time, but
has to take that and make the best of it he can; the man of genius is
in one point of view only a twig upon which a mature tendency bears
its perfect fruit. In the new epoch the vast things in process are as
yet so unfinished that individual gifts are scarce sufficient to bring
anything to a classical completeness; so that our life remains
somewhat inarticulate, our literature, and still more our plastic art,
being inadequate exponents of what is most vital in the modern
spirit.
The psychological effect of confusion is a lack of mature culture
groups, and of what they only can do for intellectual or æsthetic
production. What this means may, perhaps, be made clearer by a
comparison drawn from athletic sports. We find in our colleges that
to produce a winning foot-ball team, or distinguished performance in
running or jumping, it is essential first of all to have a spirit of intense
interest in these things, which shall arouse the ambition of those
having natural gifts, support them in their training and reward their
success. Without this group spirit no efficient organization, no high
standard of achievement, can exist, and a small institution that has
this will easily surpass a large one that lacks it. And experience
shows that it takes much time to perfect such a spirit and the
organizations through which it is expressed.
In quite the same way any ripe development of productive power
in literary or other art implies not merely capable individuals but the
perfection of a social group, whose traditions and spirit the individual
absorbs, and which floats him up to a point whence he can reach
unique achievement. The unity of this group or type is spiritual, not
necessarily local or temporal, and so may be difficult to trace, but its
reality is as sure as the principle that man is a social being and
cannot think sanely and steadfastly except in some sort of sympathy
with his fellows. There must be others whom we can conceive as
sharing, corroborating and enhancing our ideals, and to no one is
such association more necessary than the man of genius.
The group is likely to be more apparent or tangible in some arts
than in others: it is generally quite evident in painting, sculpture,
architecture and music, where a regular development by the
passage of inspiration from one artist to another can almost always
be traced. In literature the connections are less obvious, chiefly
because this art is in its methods more disengaged from time and
place, so that it is easier to draw inspiration from distant sources. It is
also partly a matter of temperament, men of somewhat solitary
imagination being able to form their group out of remote
personalities, and so to be almost independent of time and place.
Thus Thoreau lived with the Greek and Hindoo classics, with the old
English poets, and with the suggestions of nature; but even he owed
much to contemporary influences, and the more he is studied the
less solitary he appears. Is not this the case also with Wordsworth,
with Dante, with all men who are supposed to have stood alone?
The most competent of all authorities on this question—Goethe—
was a full believer in the dependence of genius on influences.
“People are always talking about originality,” he says, “but what do
they mean? As soon as we are born the world begins to work upon
us, and this goes on to the end. And after all what can we call our
own except energy, strength and will? If I could give an account of all
that I owe to great predecessors and contemporaries, there would be
but a small balance in my favor.”[79] He even held that men of genius
are more dependent upon their environment than others; for, being
thinner-skinned, they are more suggestible, more perturbable, and
peculiarly in need of the right sort of surroundings to keep their
delicate machinery in fruitful action.
No doubt such questions afford ground for infinite debate, but the
underlying principle that the thought of every man is one with that of
a group, visible or invisible, is sure, I think, to prove sound; and if so
it is indispensable that a great capacity should find access to a group
whose ideals and standards are of a sort to make the most of it.
Another reason why the rawness of the modern world is
unfavorable to great production is that the ideals themselves which a
great art should express share in the general incompleteness of
things and do not present themselves to the mind clearly defined and
incarnate in vivid symbols. Perhaps a certain fragmentariness and
pettiness in contemporary art and literature is due more to this cause
than to any other—to the fact that the aspirations of the time, large
enough, certainly, are too much obscured in smoke to be clearly and
steadily regarded. We may believe, for example, in democracy, but it
can hardly be said that we see democracy, as the middle ages, in
their art, saw the Christian religion.
From this point of view of groups and organization it is easy to
understand why the “individualism” of our epoch does not
necessarily produce great individuals. Individuality may easily be
aggressive and yet futile, because not based on the training afforded
by well-organized types—like the fruitless valor of an isolated soldier.
Mr. Brownell points out that the prevalence of this sort of individuality
in our art and life is a point of contrast between us and the French.
Paris, compared with New York, has the “organic quality which
results from variety of types,” as distinguished from variety of
individuals. “We do far better in the production of striking artistic
personalities than we do in the general medium of taste and culture.
We figure well, invariably, at the Salon.... Comparatively speaking, of
course, we have no milieu.”[80]
The same conditions underlie that comparative uniformity of
American life which wearies the visitor and implants in the native
such a passion for Europe. When a populous society springs up
rapidly from a few transplanted seeds, its structure, however vast, is
necessarily somewhat simple and monotonous. A thousand towns,
ten thousand churches, a million houses, are built on the same
models, and the people and the social institutions do not altogether
escape a similar poverty of types. No doubt this is sometimes
exaggerated, and America does present many picturesque
variations, but only a reckless enthusiasm will equal them with those
of Europe. How unspeakably inferior in exterior aspect and in many
inner conditions of culture must any recent civilization be to that, let
us say, of Italy, whose accumulated riches represent the deposit of
several thousand years.
Such deposits, however, belong to the past; and as regards
contemporary accretions the sameness of London or Rome is hardly
less than that of Chicago. It is a matter of the epoch, more
conspicuous here chiefly because it has had fuller sweep. A heavy
fall of crude commercialism is rapidly obscuring the contours of
history.
In comparison with Europe America has the advantages that come
from being more completely in the newer current of things. It is
nearer, perhaps, to the spirit of the coming order, and so perhaps
more likely, in due time, to give it adequate utterance in art. Another
benefit of being new is the attitude of confidence that it fosters. If
America could hardly have sustained the assured mastery of
Tennyson, neither, perhaps, could England an optimism like that of
Emerson. In contrast to the latter, Carlyle, Ruskin and Tolstoi—
prophets of an older world—are shadowed by a feeling of the
ascendency and inertia of ancient and somewhat decadent
institutions. They are afraid of them, and so are apt to be rather shrill
in protest. An American, accustomed to see human nature have
pretty much its own way, has seldom any serious mistrust of the
outcome. Nearly all of our writers—as Emerson, Longfellow, Lowell,
Whittier, Holmes, Thoreau, Whitman, even Hawthorne—have been
of a cheerful and wholesome personality.[81]
On the other hand, an old civilization has from its mere antiquity a
richness and complexity of spiritual life that cannot be transplanted
to a new world. The immigrants bring with them the traditions of
which they feel in immediate need, such as those necessary to found
the state, the church and the family; but even these lose something
of their original flavor, while much of what is subtler and less
evidently useful is left behind. We must remember, too, that the
culture of the Old World is chiefly a class culture, and that the
immigrants have mostly come from a class that had no great part in
it.
With this goes loss of the visible monuments of culture inherited
from the past—architecture, painting, sculpture, ancient universities
and the like. Burne-Jones, the English painter, speaking of the
commercial city in which he spent his youth, says: ... “if there had
been one cast from ancient Greek sculpture, or one faithful copy of a
great Italian picture, to be seen in Birmingham when I was a boy, I
should have begun to paint ten years before I did ... even the silent
presence of great works in your town will produce an impression on
those who see them, and the next generation will, without knowing
how or why, find it easier to learn than this one does whose
surroundings are so unlovely.”[82]
Nor is American life favorable to the rapid crystallization of a new
artistic culture; it is too transient and restless; transatlantic migration
is followed by internal movements from east to west and from city to
country; while on top of these we have a continuous subversion of
industrial relations.[83]
Another element of special confusion in our life is the headlong
mixture of races, temperaments and traditions that comes from the
new immigration, from the irruption by millions of peoples from the
south and east of the Old World. If they were wholly inferior, as we
sometimes imagine, it would perhaps not matter so much; but the
truth is that they contest every intellectual function with the older
stock, and, in the universities for instance, are shortly found teaching
our children their own history and literature. They assimilate, but
always with a difference, and in the northern United States, formerly
dominated by New England influences, a revolution from this cause
is well under way. It is as if a kettle of broth were cooking quietly on
the fire, when some one should come in and add suddenly a great
pailful of raw meats, vegetables and spices—a rich combination,
possibly, but likely to require much boiling. That fine English
sentiment that came down to us through the colonists more purely,
perhaps, than to the English in the old country, is passing away—as
a distinct current, that is—lost in a flood of cosmopolitan life. Before
us, no doubt, is a larger humanity, but behind is a cherished spirit
that can hardly live again; and, like the boy who leaves home, we
must turn our thoughts from an irrevocable past and go hopefully on
to we know not what.
In short, our world lacks maturity of culture organization. What we
sometimes call—truly enough as regards its economic life—our
complex civilization, is simple to the point of poverty in spiritual
structure. We have cast off much rubbish and decay and are
preparing, we may reasonably hope, to produce an art and literature
worthy of our vigor and aspiration, but in the past, certainly, we have
hardly done so.
Haste and the superficiality and strain which attend upon it are
widely and insidiously destructive of good work in our day. No other
condition of mind or of society—not ignorance, poverty, oppression
or hate—kills art as haste does. Almost any phase of life may be
ennobled if there is only calm enough in which the brooding mind
may do its perfect work upon it; but out of hurry nothing noble ever
did or can emerge. In art human nature should come to a total,
adequate expression; a spiritual tendency should be perfected and
recorded in calmness and joy. But ours is, on the whole, a time of
stress, of the habit of incomplete work; its products are unlovely and
unrestful and such as the future will have no joy in. The pace is
suited only to turn out mediocre goods on a vast scale.
It is, to put the matter otherwise, a loud time. The newspapers, the
advertising, the general insistence of suggestion, have an effect of
din, so that one feels that he must raise his voice to be heard, and
the whispers of the gods are hard to catch. Men whose voices are
naturally low and fine easily lose this trait in the world and begin to
shout like the rest. That is to say, they exaggerate and repeat and
advertise and caricature, saying too much in the hope that a little
may be heard. Of course, in the long run this is a fatal delusion;
nothing will really be listened to except that whose quiet truth makes
it worth hearing; but it is one so rooted in the general state of things
that few escape it. Even those who preserve the lower tone do so
with an effort which is in itself disquieting.
A strenuous state of mind is always partial and special, sacrificing
scope to intensity and more fitted for execution than insight. It is
useful at times, but if habitual cuts us off from that sea of
subconscious spirit from which all original power flows. “The world of
art,” says Paul Bourget, speaking of America, “requires less self-
consciousness—an impulse of life which forgets itself, the
alternations of dreamy idleness with fervid execution.”[84] So Henry
James[85] remarks that we have practically lost the faculty of
attention, meaning, I suppose, that unstrenuous, brooding sort of
attention required to produce or appreciate works of art—and as
regards the prevalent type of business or professional mind this
seems quite true.
It comes mainly from having too many things to think of, from the
urgency and distraction of an epoch and a country in which the
traditional structures that support the mind and save its energy have
largely gone to pieces. The endeavor to supply by will functions that
in other conditions would be automatic creates a rush which imitation
renders epidemic, and from which it is not easy to escape in order to
mature one’s powers in fruitful quiet.
There is an immense spiritual economy in any settled state of
society, sufficient, so far as production is concerned, to offset much
that is stagnant or oppressive; the will is saved and concentrated;
while freedom, as De Tocqueville noted, sometimes produces “a
small, distressing motion, a sort of incessant jostling of men, which
annoys and disturbs the mind without exciting or elevating it.”[86] The
modern artist has too much choice. If he attempts to deal largely with
life, his will is overworked at the expense of æsthetic synthesis.
Freedom and opportunity are without limit, all cultures within his
reach and splendid service awaiting performance. But the task of
creating a glad whole seems beyond any ordinary measure of talent.
The result in most cases—as has been said of architecture—is
“confusion of types, illiterate combinations, an evident
breathlessness of effort and striving for effect, with the inevitable loss
of repose, dignity and style.”[87] A mediæval cathedral or a Greek
temple was the culmination of a long social growth, a gradual,
deliberate, corporate achievement, to which the individual talent
added only the finishing touch. The modern architect has, no doubt,
as much personal ability, but the demands upon it are excessive; it
would seem that only a transcendent synthetic genius of the calibre
of Dante could deal adequately with our scattered conditions.
The cause of strain is radical and somewhat feverish change, not
democracy as such. A large part of the people, particularly the
farming class, are little affected by it, and there are indications that in
America, where it has been greater than elsewhere, the worst is now
over.
By commercialism, in this connection, we may understand a
preoccupation of the ability of the people with material production
and with the trade and finance based upon it. This again is in part a
trait of the period, in part a peculiarity of America, in its character as
a new country with stumps to get out and material civilization to erect
from the ground up.
The result of it is that ability finds constant opportunity and
incitement to take a commercial direction, and little to follow pure art
or letters. A man likes to succeed in something, and if he is
conscious of the capacity to make his way in business or
professional life, he is indisposed to endure the poverty, uncertainty
and indifference which attend the pursuit of an artistic calling. Less
prosperous societies owe something to that very lack of opportunity
which makes it less easy for artistic ability to take another direction.
An even greater peril is the debasing of art by an uncultured
market. There seem to be plenty of artists of every kind, but their
standard of success is mostly low. The beginner too early gets
commercial employment in which he is not held up to any high ideal.
This brings us back to the lack of a well-knit artistic tradition to
educate both the artist and the public, the lack of a type, “the non-
existence,” as Mr. Russell Sturgis says, “of an artistic community
with a mind of its own and a certain general agreement as to what a
work of art ought to be.” This lack involves the weakness of the
criticism which is required to make the artist see himself as he ought
to be. “That criticism is nowhere in proportion to the need of it,” says
Henry James, “is the visiting observer’s first and last impression—an
impression so constant that it at times swallows up or elbows out
every other.”
The antipathy between art and the commercial spirit, however, is
often much overstated. As a matter of history art and literature have
flourished most conspicuously in prosperous commercial societies,
such as Athens, Florence, Venice, the communes of the thirteenth
and fourteenth centuries, the trading cities of Germany, the Dutch
Republic and the England of Elizabeth. Nothing does more than
commerce to awaken intelligence, enterprise and a free spirit, and
these are favorable to ideal production. It is only the extreme one-
sidedness of our civilization in this regard that is prejudicial.
It is also true—and here we touch upon something pertaining more
to the very nature of democracy than the matters so far mentioned—
that the zeal for diffusion which springs from communication and
sympathy has in it much that is not directly favorable to the finer
sorts of production.
Which is the better, fellowship or distinction? There is much to be
said on both sides, but the finer spirits of our day lean toward the
former, and find it more human and exhilarating to spread abroad the
good things the world already has than to prosecute a lonesome
search for new ones. I notice among the choicest people I know—
those who seem to me most representative of the inner trend of
democracy—a certain generous contempt for distinction and a
passion to cast their lives heartily on the general current. But the
highest things are largely those which do not immediately yield
fellowship or diffuse joy. Though making in the end for a general
good, they are as private in their direct action as selfishness itself,
from which they are not always easily distinguished. They involve
intense self-consciousness. Probably men who follow the whispers
of genius will always be more or less at odds with their fellows.
Ours, then, is an Age of Diffusion. The best minds and hearts seek
joy and self-forgetfulness in active service, as in another time they
might seek it in solitary worship; God, as we often hear, being sought
more through human fellowship and less by way of isolate self-
consciousness than was the case a short time since.
I need hardly particularize the educational and philanthropic zeal
that, in one form or another, incites the better minds among our
contemporaries and makes them feel guilty when they are not in
some way exerting themselves to spread abroad material or spiritual
goods. No one would wish to see this zeal diminished; and perhaps
it makes in the long run for every kind of worthy achievement; but its
immediate effect is often to multiply the commonplace, giving point to
De Tocqueville’s reflection that “in aristocracies a few great pictures
are produced, in democratic countries a vast number of insignificant
ones.”[88] In a spiritual as well as a material sense there is a
tendency to fabricate cheap goods for an uncritical market.
“Men and gods are too extense.”[89]
Finally, all theories that aim to deduce from social conditions the
limits of personal achievement must be received with much caution.
It is the very nature of a virile sense of self to revolt from the usual
and the expected and pursue a lonesome road. Of course it must
have support, but it may find this in literature and imaginative
intercourse. So, in spite of everything, we have had in America men
of signal distinction—such, for instance, as Emerson, Thoreau and
Whitman—and we shall no doubt have more. We need fear no
dearth of inspiring issues; for if old ones disappear energetic minds
will always create new ones by making greater demands upon life.
The very fact that our time has so largely cast off all sorts of
structure is in one way favorable to enduring production, since it
means that we have fallen back upon human nature, upon that which
is permanent and essential, the adequate record of which is the chief
agent in giving life to any product of the mind.
FOOTNOTES:
[75] Democracy in America, vol. ii, book iv, chap. 7. But
elsewhere he expresses the opinion that this levelling and
confusion is only temporary. See, for example, book iii, chap. 21.
[76] Republic, book viii.
[77] Outre-Mer. English Translation, 306.
[78] See the final chapter of his French Traits.
[79] Conversation with Eckermann, May 12, 1825.
[80] French Traits, 385, 387, 393.
[81] Poe is the only notable exception that occurs to me.
[82] Memorials of Edward Burne-Jones, ii, 100, 101.
[83] Our most notable group of writers—flourishing at Concord
and Boston about 1850—is, of course, connected with the
maturing, in partial isolation, of a local type of culture, now
disintegrated and dispersed on the wider currents of the time.
[84] Outre-Mer, 25.
[85] In his essay on Balzac.
[86] Democracy in America, vol. ii, book i, chap. 10.
[87] Henry Van Brunt, Greek Lines, 225. Some of these
phrases, such as “illiterate combinations,” could never apply to
the work of good architects.
[88] Democracy in America, vol. ii, book i, chap. 11.
[89] Emerson, Alphonso of Castile.
CHAPTER XVI
THE TREND OF SENTIMENT
Meaning and General Trend of Sentiment—Attenuation—

Refinement—Sense of Justice—Truth as Justice—As
Realism—As Expediency—As Economy of Attention—
Hopefulness.
By sentiment I mean socialized feeling, feeling which has been
raised by thought and intercourse out of its merely instinctive state
and become properly human. It implies imagination, and the medium
in which it chiefly lives is sympathetic contact with the minds of
others. Thus love is a sentiment, while lust is not; resentment is, but
not rage; the fear of disgrace or ridicule, but not animal terror, and so
on. Sentiment is the chief motive-power of life, and as a rule lies
deeper in our minds and is less subject to essential change than
thought, from which, however, it is not to be too sharply separated.
Two traits in the growth of sentiment are perhaps characteristic of
modern life, both of which, as will appear, are closely bound up with
the other psychological changes that have already been discussed.
First a trend toward diversification: under the impulse of a growing
diversity of suggestion and intercourse many new varieties and
shades of sentiment are developed. Like a stream which is
distributed for irrigation, the general current of social feeling is drawn
off into many small channels.
Second a trend toward humanism, meaning by this a wider reach
and application of the sentiments that naturally prevail in the familiar
intercourse of primary groups. Following a tendency evident in all
phases of the social mind, these expand and organize themselves at
the expense of sentiments that go with the more formal or
oppressive structures of an earlier epoch.
The diversification of sentiment seems to involve some degree of
attenuation, or decline in volume, and also some growth of
refinement.
By the former I mean that the constant and varied demands upon
feeling which modern life makes—in contrast to the occasional but
often severe demands of a more primitive society—give rise, very
much as in the case of the irrigating stream, to the need and practice
of more economy and regularity in the flow, so that “animated
moderation”[90] in feeling succeeds the alternations of apathy and
explosion characteristic of a ruder condition. Thus our emotional
experience is made up of diverse but for the most part rather mild
excitements, so that the man most at home in our civilization, though
more nimble in sentiment than the man of an earlier order, is
perhaps somewhat inferior in depth. Something of the same
difference can be seen between the city man and the farmer; while
the latter is inferior in versatility and readiness of feeling, he has a
greater store of it laid up, which is apt to give superior depth and
momentum to such sentiment as he does cherish. Who has not
experienced the long-minded faithfulness and kindness, or perhaps
resentment, of country people, and contrasted them with the less
stable feelings of those who live a more urbane life?
In saying that life tends toward refinement it is only a general trend
that is asserted. We must admit that many phases of refined
sentiment have been more perfectly felt and expressed in the past
than they are now; but this is a matter of the maturity of special types
of culture, rather than of general progress. Thus the Italian
Renaissance produced wonders of refinement in art, as in the
painting, let us say, of Botticelli; but it was, on the whole, a bloody,
harsh and sensual time compared with ours, a time when
assassination, torture and rape were matters of every day. So, also,
there is a refinement of the sense of language in Shakespeare and
his contemporaries which we can only admire, while their plays
depict a rather gross state of feeling. A course of reading in English
fiction, beginning with Chaucer and ending with James, Howells and
Mrs. Ward, would certainly leave the impression that our sensibilities
had, on the whole, grown finer.
And this is even more true of the common people than of the well-
to-do class with which literature is chiefly occupied: the tendency to
the diffusion of refinement being more marked than its increase in a
favored order. The sharp contrast in manners and feelings between
the “gentleman,” as formerly understood, and the peasant, artisan
and trading classes has partly disappeared. Differences in wealth
and occupation no longer necessitate differences in real culture, the
opportunities for which are coming to be open to all classes, and in
America, at least, the native-bred farmer or hand-worker is not
uncommonly, in essential qualities, a gentleman.
The general fact is that the activities of life, to which feeling
responds, have become more various and subtle and less crudely
determined by animal conditions. Material variety and comfort is one
phase of this: we become habituated to a comparatively delicate
existence and so are trained to shun coarseness. Communication,
by giving abundance and choice of social contacts, also acts to
diversify and refine sentiment; the growth of order disaccustoms us
to violence, and democracy tends to remove the degrading spectacle
of personal or class oppression.
This modern refinement has the advantage that, being a general
rise in level rather than the achievement of a class or a nation, it is
probably secure. It is not, like the refinement of Greece, the
somewhat precarious fruit of transient conditions, but a possession
of the race, in no more danger of dying out than the steam-engine.
To the trend toward humanism and the sentiments—such as
justice, truth, kindness and service—that go with it, I shall devote the
rest of this chapter and the one that follows:
The basis of all sentiment of this kind is the sense of community,
or of sharing in a common social or spiritual whole, membership in
which gives to all a kind of inner equality, no matter what their
special parts may be. It is felt, however, that the differences among
men should be functional and intrinsic, not arbitrary or accidental.
The sense of justice is usually strong among the members of a
sympathetic group, the basis for determining what is just being the
perception of some purpose which every one is to serve, each in his
own way, so that he who rightly holds a higher place is the one who
can function best for the common good. It does not hurt my self-
respect or my allegiance to remain a common seaman while another
becomes captain of the ship, provided I recognize that he is the fitter
man for the place; and if the distribution of stations in society were
evidently of this sort there would be no serious protest against it.
What makes trouble is the growth of an ideal of fair play which the
actual system of things does not satisfy.
The widening of sympathy and the consciousness of larger unity
have brought the hope and demand for a corresponding extension of
justice; and all sorts of humanity—not to speak of the lower animals
—profit by this wider sentiment. Classes seek to understand each
other; the personality of women and children is recognized and
fostered; there is some attempt to sympathize with alien nations and
races, civilized or savage, and to help them to their just place in the
common life of mankind.
Our conception of international rights reflects the same view, and
the American, at least, desires that his country should treat other
countries as one just man treats another, and is proud when he can
believe that she has done so. It is surely of some significance that in
the most powerful of democracies national selfishness, in the
judgment of a competent European observer, is less cynical and
obtrusive than in any of the great states of Europe.[91]
Truth is a kind of justice, and wherever there is identification of
oneself with the life of the group it is fostered, and lying tends to be
felt as mean and impolitic. Serious falsehood among friends is, I
believe, universally abhorred—by savages and children as well as by
civilized adults. To lie to a friend is to hit him from behind, to trip him
up in the dark, and so the moral sentiment of every group attempts
to suppress falsehood among its members, however it may be
encouraged as against outsiders. “Wherefore,” says St. Paul,
“putting away lying, speak every man truth with his neighbor, for we
are members one of another.”[92]
Our democratic system aims to be a larger organization of moral
unity, and so far as it is so, in the feeling of the individual, it fosters
this open and downright attitude toward his fellows. In idea, and
largely in fact, we are a commonwealth, of which each one is a
member by his will and intelligence, as well as by necessity, and with
which, accordingly, the human sentiment of loyalty among those who
are members one of another is naturally in force. The very disgust
with which, in a matter like assessment for taxation, men
contemplate the incompatibility that sometimes exists between truth
and fairness, is a tribute to the prevailing sentiment of sincerity.
An artificial system, that is one which, however solid its hidden
foundations—and of course all systems rest on fact of some sort—
does not visibly flow from principles of truth and fairness, fails to
arouse this loyalty of partnership. One may be devoted to it, but his
devotion will be based rather on reverence for something above him
than on a sense of participation, and will call for submission rather
than for straightforward dealing. It would seem that lying and servility
are natural in the attitude of a subject toward a master, that is toward
a superior but uncomprehending power; while truth is generated in
sympathy. Tyranny may be said to make falsehood a virtue, and in
contemporary Russia, for instance, stealth and evasion are the
necessary and justifiable means of pursuing the aims of human
nature.
Another reason for the association of freedom with truth is that the
former is a training in the sense of social cause and effect; the free
play of human forces being a constant demonstration of the power of
reality as against sham. The more men experiment intelligently with
life, the more they come to believe in definite causation and the less
in trickery. Freedom means continuous experiment, a constant
testing of the individual and of all kinds of social ideas and
arrangements. It tends, then, to a social realism; “Her open eyes
desire the truth.” The best people I know are pervaded by the feeling
that life is so real that it is not worth while to make believe. “Knights
of the unshielded heart,” they desire nothing so much as to escape
from all pretense and prudery and confront things as they really are
—confident that they are not irremediably bad. I read in a current
newspaper that “brutal, unvarnished, careless frankness is the pose
of the new type of girl. She has not been developed in a school of

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PTS: 1 REF: p. 9 OBJ: 1-2 NAT: AACSB: Analytic

PTS: 1 REF: p. 12 OBJ: 1-3

PTS: 1 REF: p. 13-17 OBJ: 1-3

8. Why do we say that the U.S. economy is a mixed economy?

PTS: 1 REF: p. 15 OBJ: 1-3

9. How does socialism differ from communism?

PTS: 1 REF: p. 16-17 OBJ: 1-3

PTS: 1 REF: p. 17 OBJ: 1-4

PTS: 1 REF: p. 18 OBJ: 1-4 NAT: AACSB: Communication

PTS: 1 REF: p. 20-21 OBJ: 1-4

PTS: 1 REF: p. 21 OBJ: 1-4 NAT: AACSB: Analytic

14. In perfect competition, who sets the price of a product?

PTS: 1 REF: p. 22 OBJ: 1-5 NAT: AACSB: Analytic

PTS: 1 REF: p. 22 OBJ: 1-5 NAT: AACSB: Analytic

16. In a monopolistic competition setting, how can a manufacturer differentiate a product?

PTS: 1 REF: p. 23 OBJ: 1-5 NAT: AACSB: Analytic

PTS: 1 REF: p. 24 OBJ: 1-5 NAT: AACSB: Communication

PTS: 1 REF: p. 24-26 OBJ: 1-6 NAT: AACSB: Analytic

PTS: 1 REF: p. 29 OBJ: 1-6

29. Refer to Home Inspirations. Which of these statements is true?

34. Cultural diversity represents

36. According to Internet entrepreneur Mark Cuban,

39. Raw materials, buildings, and machinery are ____ resources.

46. Which of the following companies is an example of a manufacturer?

49. Best Buy stores would most likely be classified as

55. The relationship between sales and profits can be written as

59. For a business, stakeholders represent

60. ____ is the study of how wealth is created and distributed.

61. Microeconomics is the study of

62. The study of an individual's economic decisions would be an example of

66. The work performed to produce goods and services is referred to as

74. Which of the following is not a feature of laissez faire capitalism?

82. Households provide all of the following resources to businesses except

87. The government uses tax dollars to

89. Examples of command economies include

93. Which of the following is uncharacteristic of a socialist economy?

97. Which economist has been called the father of communism?

101. Productivity can best be described as

105. Which of the following statements is false?

114. The consumer price index (CPI)

117. The producer price index is an accurate predictor of

118. Fluctuations in a nation's economy are referred to as its

136. The rivalry among businesses for sales to potential customers

137. For firms like Target and Walmart, competition

138. Perfect competition is characterized by

139. ____ is a necessary and extremely important by-product of free enterprise.

143. As the price of jeans rises, Levi Strauss is likely to

146. Monopolistic competition is a market situation in which

151. Which of the following is not a characteristic of an oligopoly?