Regulation of Business

Question 1

The two types of influence that government has on business are __________ and nonregulatory.

Answer 1

regulatory

Question 2

The two policy tools that that government uses to influence business are privatization and __________ policy.

Answer 2

industrial

Explanation

These are both nonregulatory measures.

Question 3

Many have been calling for a reduction in size of the federal government. One option is _____________, to turn parts of the government over to private companies.

Answer 3

privatization

Explanation

This is known as privatization. Private companies, which are working for profit, tend to be smaller and more efficient than the government bureaucracy.

Question 4

Industrial policy can be defined as coordinated _________.

Answer 4

targeting

Explanation

It is the selection of firms, projects or industries for special treatment, which is combined with a government plan to influence industrial structure in specific ways.

Question 5

When US auto makers lobby the government for tariffs on foreign imports and reduced taxes for themselves they are asking for an __________ policy.

Answer 5

industrial

Question 6

There are 5 schools of thought concerning __________ policy

Answer 6

industrial

Explanation

The 5 schools are as follows: accelerationists, adjusters, targeters, central planners and bankers.

Question 7

________________ want to back winners in sunrise industries.

Answer 7

Accelerationists

Explanation

Sunrise industries is another way of saying “high-tech.” They want to accelerate changes already indicated by the marketplace.

Question 8

Adjusters would offer assistance to ______ industries in exchange for assurances that they would offer retraining and relocation assistance to employees, modernize and reduce waste.

Answer 8

sunset

Explanation

Mass production industries, such as automobiles and steel, are examples of sunset industries.

Question 9

_________ would focus on a select group of industries to transform them into engines for economic growth.

Answer 9

Targeters

Explanation

For example, finance, medical equipment, agriculture, industry, etc.

Question 10

Central planners would tie industrial policy more closely with _____________ policies.

Answer 10

macroeconomic

Explanation

Examples of real world centrally planned economies include the economies of North Korea, Cuba and the former Soviet Union.

Question 11

The bankers school of industrial policy advocate a Federally-backed __________ development bank.

Answer 11

industrial

Explanation

Question 12

The Sherman Antitrust Act was written in rather vague terms, so the _______ Act was passed in 1914 to limit specific activities that tend to reduce competition.

Answer 12

Clayton

Explanation

The Clayton Act of 1914 prohibits price discrimination, tying and exclusive agreements, and the acquisition of stock in another corporation when the result is to substantially lessen competition or create a monopoly.

Question 13

The Federal Trade Commission Act of 1914 created a federal agency which regulates marketing practices and prohibits unfair methods of ___________.

Answer 13

competition

Explanation

The Federal Trade Commission Act, passed in the same year as the Clayton Act, created the Federal Trade Commission to investigate and enforce laws such as the Sherman Antitrust Act and the Clayton Act.

Question 14

The Federal Trade Commission Act (1914) is a famous example of ______ legislation, intended to prevent individual companies or groups of companies from gaining control of markets in ways that restrain competition or harm consumers.

Answer 14

antitrust

Explanation

Other famous examples of antitrust legislation include the Sherman Antitrust Act (1890) and the Clayton Antitrust Act (1914). Such regulations sought to break up the power of huge companies such as Standard Oil.

Question 15

_________ succeeded Theodore Roosevelt as President, and during his administration filed twice the number of antitrust suits as Roosevelt, including one against Standard Oil, whose break up was ordered by the Supreme Court in 1911.

Answer 15

William Taft

Explanation

William Howard Taft more vigorously enforced anti-trust legislation, although Theodore Roosevelt was the one known as the ‘trustbuster.’ Standard Oil was broken up under the Sherman Antitrust Act in 1911.

Question 16

The _______ Act (1890), Clayton Antitrust Act (1914) and the Federal Trade Commission Act (1914) are major antitrust laws in the United States.

Answer 16

Sherman

Explanation

These are government policies and programs designed to control the growth of monopolies and enhance competition.

Question 17

When only one producer of a given product exists in a given market, it is called a _______.

Answer 17

monopoly

Explanation

A monopoly enables a producer to determine the price of a product and the quantity it will supply. In most capitalist societies, the governments enact legislation to forbid monopolies.

Question 18

A corporation whose shares are traded on securities exchanges is called a _____ corporation.

Answer 18

public

Explanation

The financial reports and other activities of a public company are regulated by the Securities and Exchange Commission (SEC) and a public company’s financial statements are available to interested investors and others. A corporation that is not publicly traded is privately held usually by an individual or relatively few individuals and their families. These financial statements are private.

Question 19

Franklin Roosevelt applied many of John Keynes’ ideas during the Great Depression through his series of government programs known as the ________.

Answer 19

New Deal

Explanation

Roosevelt’s New Deal involved government intervention to try to stimulate the economy.

Question 20

The ___________________ Commission was the first regulatory agency created by the federal government. Its responsibility was to make sure railroads were charging reasonable rates; however, it had very little real power and was often ignored.

Answer 20

Interstate Commerce

Explanation

The ICC (Interstate Commerce Commission) was created as a result of the Interstate Commerce Act of 1887

Question 21

The _______ Labor Act was developed in 1926 after a number of amendments to the Transportation Act and was drafted by combined efforts of both union representatives and executives of the transportation industry.

Answer 21

Railway

Explanation

The Railway Labor Act largely relied upon collective bargaining to resolve labor disputes and was determined to be constitutional by the Supreme Court. It was the first comprehensive labor relations law and included that parties enter mediation if unable to settle disputes.

Question 22

The ___________________ Act of 1934 created the SEC to regulate the securities industry and prohibits certain types of conduct in the market such as insider trading.

Answer 22

Securities Exchange

Explanation

The Securities Exchange Act of 1934 created the SEC (Securities and Exchange Commission) which regulates brokerage firms, the New York Stock Exchange, etc. One of the practices it prohibits and investigates is insider trading.

Question 23

The National Labor Relations Act of 1935, popularly known as the ______ Act, was designed to protect workers’ rights to unionization, and guarantees the right of employees to organize and to bargain collectively with their employers.

Answer 23

Wagner

Explanation

The National Labor Relations Act (NLRA) is usually referred to as the Wagner Act. The most important aspect of the NLRA was that it guaranteed workers’ rights to collectively bargain with employers.

Question 24

The biggest group whose actions are ______ from antitrust laws is the government.

Answer 24

exempt

Explanation

Government officials are exempt from antitrust laws. Examples of other groups which are exempt include Major League Baseball, labor unions, and the insurance industry.

Question 25

In 1938, the _______________ Act made it a requirement that all new drug applications would have to include full reports showing whether or not the drug was safe to use and work as intended.

Answer 25

Food, Drug, and Cosmetic

Explanation

Now the US Food and Drug Administration (FDA), this provision ensured that new drugs be subject to diligent review before marketing and it stipulated that all drug labels had to include adequate instruction for use or say they were to be used only on the prescription of a physician.

Question 26

The _____ has the power to advise businesses on the legality of a proposed activity relative to antitrust law.

Answer 26

FTC

Explanation

The FTC (Federal Trade Commission) has the power to advise. It also has the power to issue consent decrees, in which it agrees not to impose severe penalties in result for an end to the violation, issue cease and desist orders, or simply bring civil actions to court against a violator.

Question 27

The ___________________ and Health Act requires employers to provide safe and healthy working conditions for employees.

Answer 27

Occupational Safety

Explanation

This is known as the Occupational Safety and Health Act of 1970, more commonly referred to as OSHA, and is administered by the Occupational Safety and Health Administration.

Question 28

All forms of discrimination on the basis of race, color, sex, religion, or national origin are forbidden based on the ____________ Act of 1964.

Answer 28

Civil Rights

Explanation

This act applies to all public and private employees, labor organizations, and employment agencies. Title VII of that act specifically bans discrimination in employment.

Question 29

The ________________ Opportunity Act of 1972 (EEOA) extended the coverage of the Civil Rights Act (1964) to include state and local governments as well as public and private educational institutions.

Answer 29

Equal Employment

Explanation

Educational institutions were included as it was felt that there was a gap in the coverage of the antidiscrimination legislation.

Question 30

The most significant regulation regulating water pollution is the ________ Act of 1972.

Answer 30

Clean Water

Explanation

The Clean Water Act, passed under President Nixon’s administration, essentially replaced the Water Pollution Control Act. Its goal was to maintain or clean up water in the United States to be “fishable and swimmable,” and to eliminate the discharge of all pollutants into navigable waters.

Question 31

The US governments’ duties in relation to their ethical obligations to citizens are laid out in the Ethics in Government Act of 1978, OGE _______________ Act of 1988 and 1996 and the Ethics Reform Act of 1989.

Answer 31

Reauthorization

Explanation

The Office of Government Ethics (OGE), a small agency within the executive branch, was established by the Ethics in Government Act of 1978.