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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.
e. Individuals in the country may pursue their own economic gain and self-interest by doing
17
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.
c. dividends.
19
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.
c. selling bonds to foreign governments.
20
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
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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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As for the “front parlour” (which will form the main part of my
text), it was opened once or twice a twelve-month for high family
functions. A week beforehand, the cleaning woman (who received
six cents per hour in those blessed Neanderthal days) would arrive
with many mops and many brooms. The covers would be removed
from the antique furniture, the frames of the pictures would be duly
scrubbed. The carpets were submitted to a process which resembled
indoor ploughing and for fully half an hour each afternoon the
windows were opened to the extent of three or four inches.
Then came the day of the reception—the birthday party of the
grandfather—the betrothal of the young daughter. All the relatives
were there in their best silks and satins. The guests were there in
ditto. There was light and there was music. There was enough food
and drink to keep an entire Chinese province from starving. Yet the
party was a failure. The old family portraits—excellent pieces by
Rembrandt or Terborch—looked down upon grandchildren whom
they did not know. The grandchildren, on the other hand, were quite
uncomfortable in the presence of this past glory. Sometimes, when
the guests had expressed a sincere admiration of these works of art,
they hired a hungry Ph.D. to write a critical essay upon their
collection for the benefit of the “Studio” or the “Connoisseur.” Then
they ordered a hundred copies, which they sent to their friends that
they might admire (and perhaps envy) the ancient lineage of their
neighbours. Thereafter, darkness and denim covers and oblivion.
The history of our great Republic suffers from a fate similar to
that of these heirlooms. It lives in the “front parlour” of the national
consciousness. It is brought out upon a few grand occasions when it
merely adds to the general discomfort of the assisting multitude. For
the rest of the time it lies forgotten in the half dark of those
Washington cellars which for lack of National Archives serve as a
receptacle for the written record of our past.
Our popular estimate of history and the value of a general
historical background was defined a few years ago by Henry Ford.
Mr. Ford, having made a dozen flivvers go where none went before
and having gained untold wealth out of the motor-car industry, had
been appointed an ex-officio and highly esteemed member of our
national Council of Wise Men. His opinion was eagerly asked upon
such subjects as child-raising, irrigation, the future of the human
race, and the plausibility of the Einstein theory. During a now
memorable trial the subject of history came up for discussion, and
Mr. Ford (if we are to believe the newspaper accounts) delivered
himself of the heartfelt sentiment that “history is bunk.” A grateful
country sang Amen!
When asked to elucidate this regrettable expression of dislike,
the average citizen will fall back upon reminiscences of his early
childhood and in terms both contrite and unflattering he will
thereupon describe the hours of misery which he has spent reciting
“dreary facts about useless kings,” winding up with a wholesale
denunciation of American history as something dull beyond words.
We cannot say much in favour of late Stuarts, Romanoffs, and
Wasa’s, but we confess to a sincere affection for the history of these
United States. It is true there are few women in it and no little
children. This, to us, seems an advantage. “Famous women of
history” usually meant “infamous trouble” for their much perturbed
contemporaries. As for the ever-popular children motif, the little
princes of the Tower would have given a great deal had they been
allowed to whitewash part of Tom Sawyer’s famous fence, instead of
waiting in silken splendour for Uncle Richard’s murder squad.
No, the trouble is not with the history of this land of endless
plains and a limitless sky. The difficulty lies with the reader. He is the
victim of an unfortunate circumstance. The Muses did not reach
these shores in the first-class cabin of the Aquitania. They were
almost held up at Ellis Island and deported because they did not
have the necessary fifty dollars. They were allowed to sneak in after
they had given a solemn promise that they would try to become self-
supporting and would turn their white hands to something useful.
Clio, our revered mistress, has tried hard to live up to this vow.
But she simply is not that sort of woman. An excellent counsellor, the
most charming and trusted of friends, she has absolutely no gift for
the practical sides of life. She was forced to open a little gift-shop
where she sold flags and bunting and pictures of Pocahontas and
Paul Revere. The venture was not a success. A few people took pity
on her and tried to help. She was asked to recite poetry at patriotic
gatherings and do selections from the “Founding Fathers.” She did
not like this, being a person of shy and unassuming character. And
so she is back in the little shop. When last I saw her, she was trying
to learn the Russian alphabet. That is always a dangerous sign.
And now, lest we continue to jumble our metaphors, let us state
the case with no more prejudice than is strictly necessary.
The earliest settlers of this country brought their history with
them. Little Snorri, son of Gudrid and Thorfinn Karlsefni, playing
amidst the vines of his father’s Labradorian garden, undoubtedly
listened to the selfsame sagas that were being told at the court of
good King Olaf Tryggvason in distant Norway. The children of San
Domingo shared the glories of the Cid with the boys and girls who
visited the schools of Moukkadir’s ancient capital. And the long-
suffering infants of the early New England villages merely finished an
historical education that had begun at Scrooby and had been
continued at No. 21 of the Kloksteeg in Leyden.
During the 17th century, the greater part of the Atlantic coast
became English. The Dutch and the French, the Spanish and
Swedish traditions disappeared. The history of the British Kingdom
became the universal history of the territory situated between the
thirtieth and the fiftieth degree of latitude. Even the American
Revolution was a quarrel between two conflicting versions of certain
identical principles of history. Lord North and George Washington
had learned their lessons from the same text-book. His Lordship, of
course, never cut the pages that told of Runymede, and George
undoubtedly covered the printed sheets which told of the fate of
rebels with strange geometrical figures. But the historical inheritance
of the men who fought on the left bank of the Fish Kill and those who
surrendered on the right shore was a common one, and Burgoyne
and Gates might have spent a profitable evening sharing a bottle of
rum and complimenting each other upon the glorious deeds of their
respective but identical ancestors.
But during the ’twenties and ’thirties of the 19th century, the men
of the “old régime”—the founder and fighters of the young Republic
—descended into the grave and they took their traditions, their
hopes, and their beliefs with them. The curtain rose upon a new time
and upon a new people. The acquisition of the Northwestern
Territory in 1787 and the purchase of Napoleon’s American real-
estate in the year 1803 had changed a little commonwealth of
struggling Colonies into a vast empire of endless plains and
unlimited forests. It was necessary to populate this new land. The
history of the Coast came to an end. The history of the Frontier
began. English traditions rarely crossed the Alleghanies. The long
struggle for representative government took on a new aspect in a
land where no king had ever set foot and where man was sovereign
by the good right of his own energy.
It is true that the first fifty years of the last century witnessed the
arrival upon these shores of millions of men and women from Europe
who had enjoyed a grammar school education in the land of their
birth. But dukes do not emigrate. Those sturdy fellows who risked
the terrors and horrors of the Atlantic in the leaky tubs of the early
forties came to the country of their future that they might forget the
nightmare of the past. That nightmare included the biography of
Might which was then the main feature of the European text-book.
They threw it overboard as soon as they were well outside of the
mouth of the Elbe or the Mersey. Settled upon the farms of Michigan
and Wisconsin, they sometimes taught their children the songs of the
old Fatherland but its history never. After two generations, this
migration—the greatest of all “treks” since the 4th century—came to
an end. Roads had been made, canals had been dug, railroads had
been constructed, forests had been turned into pastures, the Indian
was gone, the buffalo was gone, free land was gone, cities had been
built, and the scene had been made ready for the final apotheosis of
all human accomplishment—civilization.
The schoolmaster has ever followed in the wake of the full
dinner-pail. He now made his appearance and began to teach.
Considering the circumstances he did remarkably well. But he too
worked under a disadvantage. He was obliged to go to New England
for his learning and for his text-books. And the historian of the
Boston school, while industrious and patient, was not entirely a fair
witness. The recollection of British red-coats drilling on the Common
was still fresh in the minds of many good citizens. The wickedness of
George III was more than a myth to those good men and women
whose own fathers had watched Major Pitcairn as he marched forth
to arrest Adams and Hancock. They sincerely hated their former
rulers, while they could not deny their love for the old mother country.
Hence there arose a conflict of grave consequence. With one hand
the New England chronicler twisted the tail of the British lion. With
the other he fed the creature little bits of sugar.
Again the scene changed. The little red school-house had
marched across the plains. It had followed the pioneer through the
passes of the Rocky Mountains. It had reached the shores of the
Pacific Ocean. The time of hacking and building and frying with lard
came to a definite end. The little red school-house gave way for the
academy of learning. College and University arose wherever a
thousand people happened to be together. History became a part of
the curriculum. The schoolmaster, jack of all learned trades and
master of many practical pursuits, became extinct. The professional
historian made his appearance. And thereby hangs a sad tale which
takes us to the barren banks of the Spree.
Ever since the Thirty Years War, Germany had been the
battlefield of Europe. The ambitions of the Napoleon who was four
feet tall and smooth shaven and the prospective ambitions of the
Napoleon who was five feet tall and who waxed his moustachios,
had given and were actually giving that country very little rest. The
intelligentsia of the defunct Holy Roman Empire saw but a single
road which could lead to salvation. The old German State must be
re-established and the kings of Prussia must become heirs to the
traditions of Charlemagne. To prove this point it was necessary that
the obedient subjects of half a hundred little potentates be filled with
certain definite historical notions about the glorious past of Heinrich
the Fat and Konrad the Lean. The patient historical camels of the
Teutonic universities were driven into the heart of Historia Deserta
and brought back those stupendous bricks of learning out of which
the rulers of the land could build their monuments to the glorious
memory of the Ancestors.
Whatever their faults and however misguided the ambition of
these faithful beasts of burden, they knew how to work. The whole
world looked on with admiration. Here, at last, in this country of
scientific precision, history had been elevated to the rank of a
“Wissenschaft.” Carrying high their banners, “For God, for Country,
und wie es eigentlich dagewesen,” all good historians went upon a
crusade to save the Holy Land of the Past from the Ignorance of the
Present.
That was in the blessed days when a first-class passage to
Hamburg and Bremen cost forty-six dollars and seventy-five cents.
Henry Adams and John Lothrop Motley were among the first of the
pilgrims. They drank a good deal of beer, listened to many excellent
concerts, and assisted, “privatissime and gratis,” at the colloquia
docta of many highly learned Geheimräte, and departed before they
had suffered serious damage. Others did not fare as well. Three—
four—five years they spent in the company of the Carolingians and
the Hohenstaufens. After they had soaked themselves sufficiently in
Ploetz and Bernheim to survive the Examen Rigorosum of the
Hochgelehrte Facultät, they returned to their native shore to spread
the gospel of true Wissenschaftlichkeit.
There was nothing typically American in this. It happened to the
students of every country of the globe.
Of course, in making this point, we feel that we expose ourselves
to the accusation of a slight exaggeration. “How now,” the industrious
reader exclaims, “would you advocate a return to the uncritical days
of the Middle Ages?” To which we answer, “By no means.” But
history, like cooking or fiddling, is primarily an art. It embellishes life.
It broadens our tolerance. It makes us patient of bores and fools. It is
without the slightest utilitarian value. A handbook of chemistry or
higher mathematics has a right to be dull. A history, never. And the
professional product of the Teutonic school resembled those later-
day divines who tried to console the dying by a recital of the Hebrew
verb abhar.
This system of preaching the gospel of the past filled the pulpits
but it emptied the pews. The congregation went elsewhere for its
historical enlightenment. Those who were seriously interested turned
to the works of a few laymen (hardware manufacturers, diplomats,
coal-dealers, engineers) who devoted their leisure hours to the
writing of history, or imported the necessary intellectual pabulum
from abroad. Others took to the movies and since those temples of
democratic delight do not open before the hour of noon, they spent
the early morning perusing the endless volumes of reminiscences,
memoirs, intimate biographies, and recollections which flood the land
with the energy of an intellectual cloaca maxima.
But all this, let us state it once more, did not matter very much.
When all is peace and happiness—when the hospitals are empty of
patients—when the weather is fine and people are dying at the usual
rate—it matters little whether the world at large takes a deep interest
in the work of the Board of Health. The public knows that
somewhere, somehow, someway, there exists a Board of Health
composed of highly trained medical experts. They also appreciate
from past experiences that these watchful gentlemen “know their job”
and that no ordinary microbe can hope to move from Warsaw to
Chicago without prompt interference on the part of the delousing
squad. But when an epidemic threatens the safety of the community,
then the public hastens to the nearest telephone booth—calls up the
Health Commissioners and follows their instructions with implicit
faith. It demands that these public servants shall spend the days of
undisturbed health to prepare for the hour of sickness when there is
no time for meditation and experiment.
The public at large had a right to expect a similar service from its
historians. But unfortunately, when the crisis came, the scientific
historical machine collapsed completely.
In Germany, the home country of the system of historische
Wissenschaftlichkeit, the historian became the barker outside the
Hohenzollern main tent, shouting himself hoarse for the benefit of
half-hearted fellow citizens and hostile neutrals, extolling the
ancestral Teutonic virtues until the whole world turned away in
disgust. In France, they arrange those things better. Even the most
unhealthy mess of nationalistic scraps can be turned into a palatable
dish by a competent cook of the Parisian school. In England, the
historian turned propagandist, and for three years, the surprised
citizens of Copenhagen, Bern, and Madrid found their mail boxes
cluttered with mysterious bundles of state documents duly stamped,
beautifully illustrated, and presented (as the enclosed card showed)
with the compliments of Professor So-and-so of Such-and-such
College, Oxford, England. In Russia, a far-seeing government had
taken its measures many years before. Those historians who had
refused to be used as cheval de bataille for the glory of the house of
Romanoff, were either botanising along the banks of the Lena or had
long since found a refuge in the universities of Sofia and Geneva. I
do not know what happened in Japan, but I have a suspicion that it
was the same thing, the entire world over.
The historian turned apologist. He was as useful as a doctor who
would show a partiality to the native streptococcus on the grounds of
loyalty to the land of his birth.
What happened on this side of the ocean after the first three
years of “peace without victory” had given place to “force to the
uttermost” is too well known to demand repetition. Long before the
first American destroyer reached Plymouth, the staunch old vessel of
history had been spurlos versenkt in the mare clausum of the
Western hemisphere. Text-books were recalled, rehashed, and
revamped to suit the needs of the hour. Long and most deservedly
forgotten treatises were called back to life and with the help of
publishers’ blurbs and reviews by members of the self-appointed
guardians of national righteousness they were sent forth to preach
the gospel of domestic virtue. Strange encyclopædias of current
information were concocted by volunteers from eager faculties. The
public mind was a blank. For a hundred years the little children had
learned to dislike history and grown-ups had revaluated this
indifference into actual hate. This situation had been created to
maintain on high the principles of scientific historical investigation.
Let popular interest perish as long as the Truth stand firm. But in the
hour of need, the guardians of the Truth turned gendarmes, the
doors of Clio’s temple were closed, and the public was invited to
watch the continuation of the performance in the next moving-picture
house. At Versailles the curtain went down upon the ghastly
performance.
After the first outbreak of applause the enthusiasm waned. Who
had been responsible for this terrible tragedy? The supposed
authors were branded as enemies of mankind. Nations tottered and
ancient Empires crumbled to dust and were hastily carried to the
nearest historical scrapheap. The ambitious monarch, who for thirty
years had masqueraded as a second Charlemagne, made his exit
amidst properties borrowed from the late King Louis Philippe. The
gay young leader of the Death Head Hussars developed into the
amateur bicycle-repairer of the island of Wieringen. International
reputations retailed at a price which could only be expressed in
Soviet rubles and Polish marks and no takers. The saviour of the
world became the invalid of the White House. But not a word was
said about those inconspicuous authors of very conspicuous
historical works who had been the henchmen of the Oberste and
Unterste Kriegsherren. They went back to the archives to prepare
the necessary post-mortem statements. These are now being
published at a price which fortunately keeps them well out of reach
of the former soldiers.
In certain dramas and comedies of an older day it was
customary to interrupt the action while the Chorus of moralising
Villagers reviewed what had gone before and drew the necessary
conclusions. It is time for the “goat-singers” to make their
appearance.
“Are you, O Author,” so they speak, “quite fair when you
pronounce these bitter words? Are we not all human—too human? Is
it reasonable to demand of our historians that they shall possess
such qualities of detached judgment as have not been seen on this
earth since the last of the Mighty Gods departed from High
Olympus? Has a historian no heart? Do you expect him to stand by
and discuss the virtues of vague political questions, when all the
world is doing its bit—while his children are risking their lives for the
safety of the common land?”
And when we are approached in this way, we find it difficult to
answer “no.” For we too are an animated compound of prejudice and
unreasonable preferences and even more unreasoning dislikes, and
we do not like to assume the rôle of both judge and jury.
The evidence, however, gives us no chance to decide otherwise.
What was done in the heat of battle—what was done under the
stress of great and sincere emotions—what was written in the agony
of a thousand fears—all that will be forgotten within a few years. But
enough will remain to convince our grandchildren that the historian
was among those most guilty of creating that “state of mind” without
which modern warfare would be an impossibility.
Here the music of the flutes grows silent. The Chorus steps back
and the main action of our little play continues. The time is “the
present” and the problem is “the future.” The children who are now in
the second grade will be called upon to bear the burden of a very
long period of reconstruction. America, their home, has been
compared to an exceedingly powerful and influential woman who is
not very popular but who must not be offended on account of her
eminent social position. The folk who live along our international
Main Street are not very well disposed towards a neighbour who
holds all the mortgages and lives in the only house that has
managed to survive the recent catastrophe. It will not be an easy
thing to maintain the peace in the neurasthenic community of the
great post-war period. It has been suggested that the Ten
Commandments, when rightly applied, may help us through the
coming difficulties. We beg to suggest that a thorough knowledge of
the past will prove to be quite as useful as the Decalogue. We do not
make this statement hastily. Furthermore, we qualify it by the
observation that both History and the Decalogue will be only two of a
great many other remedies that will have to be applied if the world is
to be set free from its present nightmare of poison gas and high-
velocity shells. But we insist that History be included. And we do so
upon the statement of a learned and famous colleague who passed
through a most disastrous war and yet managed to keep a cool
head. We mean Thucydides. In his foreword to the History of the
Peloponnesian War he wrote: “The absence of romance in my
history will, I fear, detract somewhat from its interest; but if it be
judged by those inquirers who desire an exact knowledge of the past
as an aid to the interpretation of the future, which in the course of
human things, must resemble, if it does not reflect it, I shall be
content.”
When we measure out achievements in the light of this ancient
Greek ideal, we have accomplished very little indeed. An enormous
amount of work has been done and much of it is excellent. The great
wilderness of the past has been explored with diligent care and the
material lies, carefully classified, in those literary museums which we
call libraries. But the public refuses to go in. No one has ever been
able to convince the man in the street that time employed upon
historical reading is not merely time wasted. He carries with him
certain hazy notions about a few names, Cæsar and Joan of Arc
(since the war) and Magna Charta and George Washington and
Abraham Lincoln. He remembers that Paul Revere took a ride, but
whither and for what purpose he neither knows nor cares to
investigate. The historical tie which binds him to the past and which
alone can make him understand his own position in relation to the
future, is non-existent. Upon special occasions the multitude is given
the benefit of a grand historical pyrotechnic display, paid for by the
local Chamber of Commerce, and a few disjointed facts flash by
amidst the fine roar of rockets and the blaring of a brass band. But
this sort of historical evangelising has as little value as the slapstick
vespers which delight the congregation of Billy Sunday’s circus tent.
We live in an age of patent medicines. The short-cut to success
is the modern pons asinorum which leads to happiness. And
remedies which are “guaranteed to cure” are advertised down the
highways and byways of our economic and social world. But no such
cure exists for the sad neglect of an historical background. History
can never be detached from life. It will continue to reflect the current
tendencies of our modern world until that happy day when we shall
discontinue the pursuit of a non-essential greatness and devote our
energies towards the acquisition of those qualities of the spirit
without which human existence (at its best) resembles the proverbial
dog-kennel.
For the coming of that day we must be as patient as Nature.
Hendrik Willem Van Loon
SEX
“The sin I impute to each frustrate ghost

Is the unlit lamp and the ungirt loin.”
IN one of the popular plays of last season, a melodrama toned

up with snatches of satire and farce, the wife was portrayed as a
beaten dog heeling her master after he has crushed her down
across the table the better to rowel off her nose. Not until the would-
be mutilator was finally disposed of by an untrammelled Mexican did
the woman feel free to go to her lover, and even then she took little
or no satisfaction in the venture. As for the lover, he had to be
robbed of his pistol by the husband and shot at, and then—the
husband out of the way—threatened by the bandit with the loss of
the woman, before he felt free to take her. The two New Englanders
were made happy in spite of themselves—and in accordance with
the traditions or conventions of the audience.
To leave a husband for a lover is in theory un-American, unless
the husband gives a legal ground for divorce and the divorce is
secured. In several States cruelty is a legal ground, and so the
conjugal fidelity of the stage-heroine was perhaps overdrawn. But
the feeling that she was presumed to share with the audience—that
the initiative towards freedom in love should not come from her—is a
characteristic trait of American morality. If your husband is
unrestrainedly a brute or a villain, you may leave him, in fact it
behooves you to leave him, but if he is merely a bore, or perhaps a
man you like well enough as a friend, but only as a friend, you must
stay on with him in an intimacy where boredom readily becomes
aversion and mere friendliness, disgust. The fact that you do not love
a person is no reason at all, in American opinion, for not living as if
you did.
This opinion or attitude is explicit in American divorce law. In
none of the States is divorce granted either by mutual consent or at
the desire, the overt desire, of either person. In fact collusion, as
mutual consent is called, is accounted a reason against granting
divorce, and desire for divorce on the part of one remains ineffectual
until the other has been forced into entertaining it. He or she must be
given due ground. Disinclination to intimacy is not of itself due
ground. You must express disinclination in a way so disagreeable
that he or she will want to get rid of you. The law sets a premium on
being hateful, declares indeed that in this case it is an indispensable
condition to not being miserable.
The grotesqueness, from either a social or psychological point of
view, would be too obvious to emphasize, if the implications of this
attitude towards divorce were not so significant of American attitudes
at large towards sex—attitudes of repression or deception. Of
deception or camouflage towards divorce there is one other
conspicuous point I should like to note. “Strictness of divorce” is
commonly argued to be protection of marriage for the sake of
children, since brittle marriage is destructive of the family life. It is
safe to say that from no contemporary discussion of divorce will this
argument be omitted; and it is equally safe to say that the rejoinder
that divorce laws should therefore discriminate between parents and
non-parents will, by the opponents of divorce, pass unheeded. That
this distinction should be so persistently ignored is accountable only,
it seems to me, on the ground of emotional self-deception. What else
but a covert emotional attitude could make tenable the irrationality,
and what else is that attitude but that joy in mating is of negligible
value, that sex emotion, if not a necessary evil, is at any rate a
negligible good, deserving merely of what surplus of attention may
be available from the real business of life? Indifference towards sex
emotion is masked by concern for offspring.
In France, we may note, this confusion between parenthood and
mating does not exist. The parental relation in both law and custom
is highly regulated, much more regulated than among English-
speaking peoples, but it is unlikely that it would be argued in France
that mating and parenthood were inseparable concepts. Unlikely,
because the French attitude towards sex differs so radically from the
Anglo-Saxon.
To the French, as to many of the Continental peoples of Europe,
sexual interest is normally to be kept stimulated, neither covered
over nor suppressed. And in this case stimulation is seen to depend
largely upon the factor of interrelation. Sex-facts are to be related to
other facts of life, not rigidly or a priori, as in the American view that
mating is inseparable from parenthood, but fluently and realistically,
as life itself moves and finds expression. And sex-facts in European
opinion are to be interrelated in a philosophy of sex. Failure to make
these interrelations, together with the attitude of suppression, seem
to me to be the outstanding aspects of the characteristically
American attitude towards sex.
There is no need in this post-Freudian day of dwelling upon the
effects of suppression of sex instinct or impulse. Suppression leads,
we are told, either to sublimation, in which case it is diversion, rather
than suppression, or it leads to perversion or disease. Unfortunately
sex-pathology in the United States has been given little or no study,
statistically. We have no statistical data of health or disease in
relation to the expression or suppression of sex instinct, and no data
on the extent or the effects of homosexuality or of the direction of the
sex impulses towards self. Opinion therefore becomes merely a
matter of personal observation and conclusion, observation of
individuals or small groups. My own conclusion or guess in regard to
perversion in this country is that part of the commonly observed spirit
of isolation or antagonism between the sexes, and part of the spirit of
competition between individuals, are associated with homosexual or
masturbatory tendencies which get expressed in varying degrees
according to varying circumstances. More particularly the lack of
warmth in personal intercourse which makes alike for American bad
manners and, in the more intellectual circles, for cheerlessness and
aridity is due, I think, to failure of one kind or another in sex relations.
I mean cultural failure, not merely individual failure.
May not some such theory of sex failure account also for that
herd sense which is so familiar a part of Americanism, and which is
not incompatible with the type of self-seeking or pseudo-
individualism of which American individualism appears to be an
expression? It is a tenable hypothesis that sexually isolated
individuals become dependent upon the group for stimulus, whether
of emotion or will, whereas persons in normal sex relations, although
they may contribute to the group or co-operate with it, remain
comparatively independent of it, finding stimulus in sex and its
sublimations.
If this theory is valid, we may expect to find a comparatively
large number of sex failures in those circles which are characterized
by what Everett Dean Martin has recently called crowd behaviour,
reform circles intolerant of other mindedness and obsessed by belief
in the paramountcy of their own dogma.
“Leur printemps sans jeunesse exige des folies,

Leur sang brûlant leur dicte des propos amers,
L’émeute est un remède à la mélancolie,
Et nous aurions la paix si leurs yeux étaient clairs,
Ou leur femme jolie.”
Were a set of tests for sex failure or sex fulfilment applied to the
more outstanding propagandists of this country, likewise, of course,
for comparative purposes, to an adequate number of non-
propagandists, the results might be of considerable significance. I
recommend the undertaking to the National Research Council in co-
operation with some organization for social hygiene.
Meanwhile in what measure propagandism of various sorts may
be a perversion of sex or a sublimation remains speculative; and in
applying theory one should be thoroughly aware that from the day of
Sappho and before to the day of Elizabeth Blackwell and after, even
to the Russian Revolution, sex failure of one kind or another, the kind
considered at the time most despicable, has commonly been
imputed to persons or groups disapproved of on other grounds or
reprobated. Some sublimation of sex in the United States there must
be, of course, not only, in propaganda movements, but in other
expressions of American culture, in American art and letters and
science, in philanthropy, in politics, finance, and business. By and
large, however, in all these cultural expressions does one see any
conspicuous measure of sex sublimation? Is not the concern
practical rather than devotional, a matter of getting rather than
giving, of self-advancement or family support rather than of interest
in ideas and their forms or in the values of taste or of faith?
Interest in impersonal subjects in general is not an American
trait. Personal concrete terms are the terms commonly used.
Americans, as we say, are not given to abstract thought or
philosophy. They are interested in facts as facts, not as related to
other facts. How expect of Americans, therefore, that kind of curiosity
about sex which leads to a philosophy of sex? Sex curiosity in
American life does not lead past curiosity about isolated facts, and
that means that it leads not to philosophy but to gossip and
pruriency. Not long ago I was talking with a woman about a common
acquaintance to whom I referred as singularly free through
sophistication and circumstance to please any man she liked. “What
do you mean? Have you heard any scandal about her?” snapped out
my companion, not at all interested in the general reflection, but avid
of information about illicit affairs.
Facts which are not held together through theory call for labels.
People who do not think in terms of relations are likely to be insistent
upon names. Labels or names for sex disposition or acts are, as a
matter of fact, very definite in the American vernacular. “Engaged,”
“attentive,” “devoted,” “a married man,” “a man of family,” “a grass
widow,” “a good woman,” “a bad woman”—there is no end to such
tags. Again, intimacy between a man and a woman is referred
definitely to the act of consummation, a sex relation is strictly
classified according to whether or not it is physically consummated.
In this attitude towards sex boundaries or captions may lie the
explanation, incidentally, of what is a constant puzzle to the
European visitor—the freedom of social intercourse allowed to the
youth of opposite sexes. Since consummation only constitutes
sexual intimacy in American opinion, and since consummation, it is
assumed, is utterly out of the question, why raise barriers between
boys and girls? The assumption that consummation is out of the
question is, by and large, correct, which is still another puzzle. To
this some clue may be found, I think, in our concluding discussion.
Fondness for captions and for the sort of classification that is so
likely to paralyze perception of the finer distinctions and to arrest
thought, are natural enough in a child, learning language and so
pressed upon by the multiplicity of phenomena that in self-protection
he must make rough classifications and remain unaware of much.
The old who are dying to life are also exclusive, and they, too, cling
to formulas. Is American culture in the matter of sex childish and
immature, as Americans imply when they refer to their “young
country,” or is the culture representative of the aged; are Americans
born old, as now and again a European critic asserts?
Such terms of age are figurative, of course, unless we take them
in a historical sense, meaning either that a new culture was
developed in this country—or rather that there were fresh
developments of an old culture—or that an old culture was
introduced and maintained without significant change. This is not the
place to discuss the cultural aspects of Colonial America, but it is
important to bear in mind in any discussion of merely
contemporaneous sex attitudes in this country the contributions of
European, and more particularly, English morality. Without recalling
the traditions of early Christianity or of English Puritanism, those
attitudes of ignoring or suppressing the satisfactions of the impulses
of sex to which we have referred were indeed incomprehensible and
bewildering—mere psychological interpretation seems inadequate.
But viewed as consequences of the sense of sin in connection with
sex, which was a legacy from Paul and his successors in English
Puritanism, interpretation is less difficult, and the American attitude
toward sex becomes comparatively intelligible—the attitude seen in
divorce and in the melodramas, and in the standardizing of sex
relations, in accordance with that most significant of Pauline dogmas
that marriage is the lesser of two evils, that it is better to marry than
to burn. Without the key of Paul and of the obscenities of the early
Christian Fathers how explain the recent legislation in Virginia
making it a crime to pay attention to a married man or woman, or
such a sermon as was recently preached somewhere in the Middle
West urging a crusade against the practice of taking another man’s
wife in to dinner or dancing round dances? “At a dinner of friends let
every man take his own wife on his arm and walk in to their seats
side by side at the dinner table to the inspiring music of ‘Onward
Christian Soldiers,’” urged the minister. As to dancing, whenever a
man is seen to put his arm around a woman who is not his wife, the
band should cease playing. I do not quote the words of the latter
injunction, as they are rather too indecent.
Turning from the historical back to the psychological point of
view—in one of those circles of cause and effect that are composed
now of cultural inheritance or tradition, now of psychological trend or
disposition—the American case of sex, whether a case of
adolescence or of senescence, may be said to present symptoms of
arrested development. Together with the non-realism of childish or
senile formula, there is here the kind of emotionalism which checks
emotional vitality and which is fed upon the sense of crisis; we may
call it crisis-emotion. Life at large, the sex life in particular, is
presented as a series of crises preceded and followed by a static
condition, and in these conventional times of crisis only, the times
when the labels are being attached, are the emotions aroused. In the
intervals, in the stretches between betrothal, marriage, birth,
christening, or divorce, there is little or no sense of change—none of
the emotions that correspond to changing relations and are
expressions of personal adjustment. The emotions of crisis are
statutory, pre-determined, conventionalized; neither for oneself nor
for others do they make any demands upon imagination, or insight,
or spiritual concern.
Here in this psychology of crisis is the clue—before mentioned—
to an understanding of the freedom allowed our youth, of “bundling,”
as the Colonials termed it, or, in current phrase, “petting.” In general,
“keeping company” is accounted one kind of a relationship,
marriage, another—one characterized by courtship without
consummation, the other by consummation without courtship.
Between the two kinds of relationship there is no transition, it is
assumed, except by convention or ritual. So inrooted is this social
attitude that the young cannot escape adopting it, at least the very
young to whom, at any rate, uncritical conservatism seems to be
natural. Indeed the taboo on unritualized consummation partakes
enough of the absolutism of the taboo, shall we say, on incest, to
preclude any risk of individual youthful experimentation or venture
across the boundary lines set by the Elders.
Given these boundary lines, given a psychology of crisis, all too
readily the sex relations, in marriage or out, become stale, flat,
colourless, or of the nature of debauch, which is only another aspect
of crisis-psychology. Sex relations perforce become limited to two
conventions, marriage and prostitution. Prostitute or wife, the
conjugal or the disorderly house, these are the alternatives. In
formulaic crisis-psychology there may be no other station of
emotional experiment or range of emotional expression.
That a man should “sow his wild oats” before marriage, and after
marriage “settle down,” is becoming throughout the country a
somewhat archaic formula, at least in so far as wild oats means
exposure to venereal disease; but there has been no change, so far
as I am aware, in the attitude towards the second part of the formula
on settling down—in conjugal segregation. The married are as
obtrusively married as ever, and their attitude towards persons of the
opposite sex as dull and forbidding. Few “happily married” women
but refer incessantly in their conversation to their husband’s opinion
or stand; and what devoted husband will fail to mention his wife in
one way or another as a notice of his immunity against the appeal of
sex in any degree by any other woman? Shortly after the war, a
certain American woman of my acquaintance who was travelling in
France found herself without money and in danger of being put off
her train before reaching Paris and her banker’s. She found a fellow-
countryman and told him her predicament. He was quite willing to
pay her fare; she was an American and a woman, but she was
informed firmly and repeatedly that her knight was a married man,
and besides, he was travelling with his business partner. Soon after I
heard this anecdote I happened to repeat it to a Chicago lawyer who
promptly joined in the laugh over the American man’s timidity. “Still, a
married man travelling can’t be too prudent,” he finished off.

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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