Chapter 2 Business Law Practice Test

The federal government cannot regulate commerce within a state, even if the commerce concerns more than one state.

False

A federal form of government is one in which sovereign power is vested entirely in a central governing authority.

False

Jim believes that his privacy rights were violated by his employer, the state of Colorado, when it disclosed several items about him, including some financial and health information. In general, Jim may look at all the areas of law except which of the following to determine if his privacy rights were violated?

Criminal law

President Woodrow Wilson negotiated the treaty that ended World War I, but Congress refused to ratify the treaty. This event exemplifies the principle of:

checks and balances.

Under a federal form of government, the relationship between states and the central government may be described as:

a partnership in which the federal government and the states share sovereign powers.

The checks and balances in the U.S. Constitution prevent any one branch of government from exercising too much power.

True

A federal law that promotes a religion is unconstitutional.

True

Under the First Amendment, commercial speech is given:

less protection than noncommercial speech.

A law that restricts a fundamental right does not violate substantive due process if it promotes a compelling state interest.

True

The Supreme Court first held that the Constitution protects individual privacy rights during the:

1960s.

The Constitution provides for three branches of government.

True

Cordial Drinks, Inc., markets alcoholic beverages. A federal regulation bans the disclosure of the alcohol content of liquor on Cordial's labels and those of other marketers. A court would likely hold this regulation to be:

an unconstitutional restriction of speech.

Whether the federal government has preempted a certain area is always clear.

False

If a law or action prohibits or inhibits some people from exercising a fundamental right, the law or action will be subject to what level of scrutiny by courts?

Strict scrutiny

Owen claims that a Pennsylvania state statute infringes on his "substantive due process" rights. This claim focuses on:

the content of the statute.

Privacy rights receive protection under:

the U.S. Constitutions, state constitutions, federal statutes, state statutes, and tort law.

The clause in the federal Constitution that has had the greatest impact on business is the:

commerce clause.

The Bill of Rights contains a list of protections for the individual against governmental interference. Whenever the language describing a right is overly broad or unclear:

the United States Supreme Court decides what the language means.

Article VI of the Constitution, commonly referred to as the supremacy clause, provides that when there is a direct conflict between a federal law and a state law:

the state law is rendered invalid.

Cameron discovers that his medical provider has accidentally released all of Cameron's medical records without Cameron's permission. If Cameron sues, which federal law is most likely to help him win his case?

Health Insurance Portability and Accountability Act

As originally intended, the Bill of Rights limited the powers of:

the national government only.

By enacting fire and building codes, parking regulations, and zoning restrictions, state and local governments are exercising:

police powers.

The First Amendment does not protect commercial speech as extensively as noncommercial speech.

True

A Minnesota state statute restricts certain kinds of advertising to protect consumers from being misled. A court would likely hold this statute to be:

constitutional under the First Amendment.

Profit Company would like to review the information that the U.S. Department of Labor (DOL) has in its files about the company. Which of the following statutes allows Profit Company to request this information from the DOL?

The Freedom of Information Act

A New Hampshire state law that directly conflicts with a federal law is invalid under:

the supremacy clause.

Melanie engages in speech that harms others' good reputations on her blog at no.lie.com. The First Amendment gives such speech:

no protection.

The state of Oregon enacts a statute that automatically revokes the driver's license of anyone caught text messaging while driving a vehicle. The statute provides that there is no right to a hearing regarding this type of driver's license revocation. While driving her car in Oregon, Sarah is stopped by a police officer who gives her a ticket for text messaging while driving and also informs her that her driver's license has been revoked. The Oregon statute:

violates Sarah's procedural due process rights.

Police powers allow states to:

regulate private activities to promote public health, safety, and general welfare.

Following the Revolutionary War, the states created a confederal form of government in which:

the states had the authority to govern themselves and the national government could exercise only limited powers.

The city of Trenton, New Jersey, passed an ordinance making it unlawful to use any form of sound amplification on the city streets. A city prosecutor, Charles Kovac, mounted an amplifier on a truck through which he played music and spoke on the microphone while driving on city streets. Kovac was tried and convicted in the Trenton Police Court and fined fifty dollars. Kovac appealed, arguing that the ordinance violated his rights of free speech and free assembly. The city claimed that the ordinance served a legitimate governmental function in keeping the city streets safe and orderly and did not prohibit free speech or assembly. The court probably found that the ordinance was:

constitutional as a reasonable restriction on fundamental rights.

The federal government cannot regulate commerce within a state, regardless of the effect of commerce on other states.

False

If a law limits a fundamental right, the law must promote a compelling or overriding state interest or it will be held to violate:

the substantive due process.

The Constitution specifically guarantees a right to privacy.

False

Under the Constitution, the judicial branch interprets the laws.

True

The Bill of Rights confers absolute rights, not subject to interpretation by the United States Supreme Court.

False

Colorado enacts a statute that limits the liberty of all persons, including corporations, to broadcast "annoying" radio commercials. This may violate:

the substantive due process.

Ralph Young was a commercial tour boat operator on the northern coast of Kauai, Hawaii. He was licensed by the state of Hawaii to operate his boat in Hanalei Bay. The U.S. Department of Transportation and the U.S. Coast Guard had also specifically granted Young an unrestricted license to operate his boats in Hanalei Bay. Hawaii subsequently passed a law that banned all commercial use of Hanalei Bay. The state refused to renew Young's state license and he was not allowed to operate his vessel under his federal licenses. Young filed a lawsuit against the state alleging that the state law that prohibited him from operating his boat conflicted with the federal law that authorized him to do so. The court probably found that the state law was:

unconstitutional under the supremacy clause.

Brad stands in front of Rustler's Round-Up Café, shouting "fighting words" that are likely to incite Rustler's patrons to respond violently. The First Amendment protects such speech:

none of the time.

The Supreme Court has held that a constitutional right to privacy was implied by the Sixth Amendment.

False

Congress enacts the Tight Money Act (TMA) of 2006 to ban "major business entities" from making political contributions that individuals can make. A court would likely hold the TMA to be:

an unconstitutional restriction of speech.

The Iowa state legislature passed a statute banning sixty-five-foot twin trailer trucks from operating on its state roads, highways, and interstate freeways. Consolidated Freightways (CF) employees drove twin and triple trailer trucks through Iowa on a regular basis. Switching to single trailer trucks either for all of its routes or just for the trip through Iowa was inconvenient, inefficient, and costly. CF filed a lawsuit contending that the statute was unconstitutional. The court most likely found that the Iowa statute was:

unconstitutional state interference with interstate commerce.

Expression of all kinds is subject to reasonable restrictions.

True

The system of checks and balances set forth in the U.S. Constitution allows:

each branch to limit the actions of the other branches.

If Congress passes a 2 percent tax on cigarette sales in New Jersey only, this law will most likely be held:

unconstitutional according to Article I, Section 8.

Jarrod is starting a web business, but becomes worried when he hears that the USA Patriot Act gave authority to government officials to monitor what he does online. Knowing what you know about the USA Patriot Act, you should tell Jarrod that the government may monitor which of the following?

His e-mail

His personal financial data

His web site visits

The Constitution provides that the national government has the implied power to:

undertake actions necessary to carry out its expressly designated powers.

The First Amendment protects Ira and other individuals who engage in speech that violates state criminal laws:

none of the time.

Local governments, including cities, can exercise police powers

True

Under the Constitution, the judicial branch enforces the laws.

False

An Alabama state statute prohibits business entities from using bill inserts to express controversial views. A court would likely hold this law to be:

an unconstitutional restriction of speech.

Political speech that would otherwise be protected by the First Amendment is prohibited if its source is a corporation.

False

When state regulations impinge on interstate commerce, commerce must yield to the regulations.

False

Congress determines the jurisdiction of the federal courts.

True

Under the supremacy clause, when there is a direct conflict between a federal and a state law, both laws are given equal effect.

False

Under the supremacy clause, the federal law governs.

Dian, a U.S. citizen, is the owner of Eagle, Inc. The Bill of Rights embodies a series of protections for Dian against various types of interference by:

the government only.

The USA Patriot Act has been criticized for:

violating privacy rights with domestic surveillance.

A law that restricts a fundamental right violates substantive due process regardless of the type of state interest that the law "promotes."

False

A restriction on commercial speech that implements a substantial government interest may be valid.

True

The First Amendment protects symbolic speech.

True

Privacy rights receive protection under:

both federal law and state law.

Any person can ask for copies of any information on that person contained in federal government files.

True

If there is a direct conflict between a federal law and an Alaska state law:

the federal law takes precedence.

The commerce clause of the U.S. Constitution authorizes:

the Congress to regulate commerce.

The Fourth Amendment:

prohibits unreasonable searches and seizures.

Equal protection means that the government must treat similarly situated individuals in a similar manner.

True

The establishment clause of the U.S. Constitution prohibits the federal government from establishing an official religion.

True

A Rhode Island state statute imposes a prison term, without a trial, on all street vendors who operate in certain areas. A court would likely hold this statute to be:

unconstitutional under the due process clause.

The Be Well Clinic Inc., provides health care services to patients. The clinic has several employees, including doctors, nurses, and clerical personnel. Under the Health Insurance Portability and Accountability Act (HIPPA), the clinic:

must secure its patients protected health information and limit its disclosure.

A law that distinguishes between or among individuals violates the equal protection clause.

False

In response to rapidly rising property taxes, California voters approved a statewide ballot initiative, Proposition 13, which froze property taxes regardless of the appraised value of the property. The state was to reassess the value of the property and could increase taxes only when the ownership of property was transferred. The property was exempt from this reassessment if the exchange of ownership was made between persons over the age of fifty-five or between parents and children. Over time, this system created dramatic differences in the taxes paid by people owning similar property. Long-term owners paid lower taxes; new owners paid higher taxes. Stephanie Nordlinger bought a house in Los Angeles County. Nordlinger then sued the county, claiming that the tax system was unconstitutional under the equal protection clause because it allowed the government to treat similarly situated individuals differently. In finding that the law did not violate the equal protection clause, the court most likely applied which of the following standards?

The rational basis test

State laws often significantly protect individuals' privacy rights.

True

A Delaware law allowed electrical contractors doing state-funded work to pay lower wage rates to apprentices if the contractors had registered their apprenticeship programs in the state. Out-of-state contractors, however, could not pay the lower rate unless they maintained a permanent office in Delaware. If an out-of-state contractor files suit claiming that Delaware's regulations discriminate against out-of-state contractors the federal court will probably:

find the law to be in violation of the dormant commerce clause.

Under the Constitution, the states retain all powers not specifically delegated to the federal government.

True

Under the USA Patriot Act, government officials may track certain telephone and e-mail communications relevant to an ongoing criminal investigation without providing proof of any wrongdoing.

True

The federal government retains all powers not specifically delegated to the states.

False

Which of the following is not a federal statute protecting privacy rights?

The Freedom of Information Act

The Driver's Privacy Protection Act

The Protection of Personal Privacy Act

The Tax Reform Act

The Protection of Personal Privacy Act

Jarrod has been conducting his web business for about a year now, and really wants to know what information the government has collected on him. He may be able to get some of those records pursuant to the:

Freedom of Information Act.

A Metro City ordinance allows only a few street vendors to operate in certain areas for the purpose of reducing traffic. A court would likely hold this ordinance to be:

constitutional under the equal protection clause.

State police powers relate solely to criminal law enforcement.

False

Mike, an advocate of a certain religion, publishes an article in New Times magazine insisting that the Congress base all federal law on his religion's principles. The First Amendment guarantees Mike's freedom of:

religion, speech, and the press.

Wisconsin, like other states, may regulate private activities to protect or promote the public order, health, safety, and general welfare under its:

police powers.

Some constitutional protections apply to business entities.

True

Congress may regulate any activity that substantially affects interstate commerce.

True

The courts can hold acts of the legislative and executive branches unconstitutional.

True