busines government and society midterm questions

True or False

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

True. It involves government decisions on funding, taxation, and regulation of health services, which are core economic activities.

Antitrust laws protect consumers from:

Anticompetitive practices by business. They promote competition by preventing monopolies, price-fixing, and other practices that unfairly limit trade.

By raising and lowering interest rates for private banks, the Federal Reserve Bank:

Influences both the size of the nation's money supply and the value of the dollar. This action affects lending, spending, and currency exchange rates.

True or False

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

True. It's a standard tool to compare the total estimated costs of a regulation with its expected benefits to determine if it's justified.

Deregulation has occurred in which industries?

Commercial airlines, railroads, and financial institutions. These are three major U.S. industries that experienced significant deregulation in the late 20th century.

True or False

Economic regulations aim at modifying the normal operations of the free market and the forces of supply and demand.

True. They are government interventions designed to alter market behavior to achieve goals like fair competition or consumer protection.

Economists reported that the costs of regulatory compliance were highest for:

Worker safety. OSHA regulations often require significant business investment in equipment, training, and procedures.

Government and business together establish the regulatory rules under which business operates in society.

True. While governments make the rules, businesses actively participate in shaping them through lobbying, consultation, and influence.

Government regulations help balance negative externalities such as:

No smoking rules enforced to mitigate the effects of second-hand smoke. This addresses the health cost imposed on non-smokers, a classic negative externality.

Government's role is to create and enforce laws that:

Balance the relationship between business and society. It must protect society from business harms while also protecting business interests for a stable economy.

Governments being asked to regulate driving distractions are examples of a public policy:

Input. Public demand or concern is an input that signals a problem needs to be addressed in the policy-making process.

In the case "Should Facebook Be Regulated," the primary market failure was:

Sales incentives to sell user data exceeded those of protecting user privacy. The business model created a misalignment where monetizing data was more profitable than safeguarding privacy.

Managers' understanding of government regulations is:

Both a domestic and international issue. Managers must comply with regulations in their home country and in every foreign country where they operate.

Policies that affect the supply, demand, and value of a nation's currency are:

Monetary policies. These are administered by a central bank using tools like interest rates and money supply controls.

Public policy tools involve a combination of:

Incentives and penalties. Governments use rewards (like subsidies) to encourage desired behavior and punishments (like fines) to discourage unwanted behavior.

Regulation can be argued as justified based on:

Utilitarian and justice grounds. Utilitarian: creates the greatest good. Justice: ensures fairness and protects rights.

Which of the following are examples of natural monopolies?

Electric utilities and railroads. The high fixed cost of infrastructure makes it inefficient to have multiple competitors in one area.

A common tactic in a financial-incentive political strategy is:

Political contributions. Providing direct financial support to candidates or parties to gain access and influence.

Businesses promote an information strategy by inviting government leaders to:

All of these (visit plants, attend ceremonies, give speeches). These are all tactics to share positive information and build relationships.

True or False

Businesses that are frequent targets of public debate are more likely to develop a long-term political strategy.

True. Sustained public and political scrutiny creates greater risk, necessitating a proactive, long-term strategy.

A company that builds stakeholder coalitions to influence government is using which strategy?

Constituency-building. Mobilizing stakeholders (employees, customers) to act as a collective political force.

Economic leverage occurs when a business uses its economic power to:

Threaten to leave a location unless a desired political action is taken. Using the threat of lost jobs/investment to gain concessions like tax breaks.

Expert witness testimony is often collected:

In congressional hearings. These formal proceedings are a primary channel for experts to provide information to lawmakers.

Firms in the chemical industry, which must contend with frequently changing regulations, usually have:

A sophisticated political strategy. High-risk, heavily regulated industries require advanced, proactive strategies to manage their political environment.

Hiring former government officials for positions in the corporate world is:

Normally legal. It is legal subject to ethics rules (like "cooling-off" periods), though it can raise ethical concerns about influence.

In a survey, the most frequent public affairs tactic was related to:

Federal government relations. Lobbying and maintaining relationships with the federal government is the most common and resource-intensive tactic.

Lobbyists, under U.S. law, must disclose their:

Earnings and expenses. The Lobbying Disclosure Act requires reports on compensation for lobbying and lobbying-related expenses.

Proponents of business as a political participant argue:

Both: A pluralistic system invites many participants, and business is a vital stakeholder. They claim inclusion is democratic and business input is essential.

Public policies and government regulations are shaped by:

All of these (business, special interest groups, government). Policy is the result of dynamic interaction and competition among these groups.

Since 2008, the total amount spent on lobbying activity has:

Increased slightly. While fluctuating, the overall trend has been a slight increase, maintaining a consistently high level of spending.

Ture or False

Those who oppose business involvement with politics argue that managers do not have enough expertise to participate.

False. Opposition is based on concerns over undue influence and corruption, not a lack of managerial expertise.

To influence policymakers, an information strategy involves:

Business leaders speaking before government policymakers. Directly providing data, research, and arguments to educate and persuade officials.

When a firm gathers political contributions from stockholders and sends them together to a candidate, it is called:

Bundling. The practice of collecting and presenting numerous individual contributions as a package to amplify influence.

Which is NOT a constituency-building strategy tool?

Legal challenges. Constituency-building mobilizes public support. Legal challenges use the court system, which is a confrontational strategy.

Accurately describe a Super PAC?

Does not allow direct contributions to candidates or political parties. Its defining trait is operating as an "independent expenditure-only committee."

What is the economic concept of creative destruction?

short: The process where innovation destroys old industries/jobs while creating new ones. It's the engine of capitalist change. (Schumpeter)

Creative destruction is the process by which new innovations, technologies, and business models continuously revolutionize the economic structure from within, destroying old industries, companies, and jobs while simultaneously creating new ones. It is the essential engine of capitalist evolution and long-term economic growth. (Coined by economist Joseph Schumpeter)

What are the primary causes of creative destruction?

Short: Technological innovation, entrepreneurial activity, and intense competition. These forces create superior products/markets that make old ones obsolete.

The main drivers are technological innovation, entrepreneurial activity, and intense competition. These forces lead to the development of superior products, more efficient processes, and new markets, which render existing methods, products, and companies obsolete. Examples include the invention of the automobile (destroying the horse-drawn carriage industry) or digital streaming (disrupting physical media like DVDs).