Exam: 500617RR - American Business and Its Basis

1. Expressing a broad view of corporate social responsibility, Professor Keith Davis maintains that social responsibility arises from
A. cultural values.
B. vested interests.
C. social power.
D. social status.

2. According to your textbook, a hybrid economic system that blends socialism and capitalism is called
A. public capitalism.
B. welfarism.
C. worker-controlled socialism.
D. free market socialism

3. You believe that pure laissez-faire capitalism may do little to prevent poverty, and may even foster it. According to your textbook, your views would make you a(n)
A. repudiator of the capitalist system.
B. moderate defender of capitalism
C. uncertain defender of capitalism.
D. extreme defender of capitalism.

4. Which of the following statements about changing work attitudes among Americans is correct?
A. Most Americans continue to believe that persistent hard work will lead to success.
B. As Americans become better educated they're more likely to believe in the "American dream".
C. In terms of expressed life priorities, Americans feel that work ranks just a little below having a great love life.
D. On average, Americans work more hours per week than their counterparts in countries like Japan or France.

5. In his masterwork, An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith asserted that the human inclination to self-interest that leads to the increased good of the whole is naturally
regulated by
A. the profit motive.
B. moral sensibility.
C. competition.
D. rationality.

6. Anna and Beatrice are discussing the positions adopted by economist Milton Friedman. Anna says that because corporate executives are selected by shareholders, their primary corporate responsibility must be to shareholders. Beatrice says that when executives spend corporate earnings for "social" purposes, they're imposing a tax on shareholders and have become "civil servants." Which of the following statements is correct?
A. Both Anna and Beatrice are correct.
B. Only Anna is correct.
C. Neither Anna nor Beatrice is correct.
D. Only Beatrice is correct.

7. "I believe in corporations. They are indispensable instruments of our modern civilization; but I believe that they should be so supervised and so regulated that they shall act for the interests of the community as
a whole." Who said this?
A. John Kenneth Galbraith
B. Robert Reich
C. Bill Clinton
D. Theodore Roosevelt

8. Dale and Scott are debating the importance of America's trade deficit. Dale points out that the value of American imports is now about twice the value of the nation's exports. Scott maintains that all economists now agree that the U.S. trade deficit is leading toward unsustainable global imbalances. Which of the following statements is correct?
A. Only Scott is correct.
B. Both Dale and Scott are correct.
C. Only Dale is correct.
D. Neither Dale nor Scott is correct.

9. In the United States, a general trend toward the corporate organization of businesses began
A. under the influence of Elizabeth I.
B. under the influence of Alexander Hamilton after 1800.
C. after the Civil War.
D. with the corporate charters that identified the various colonies.

10. According to your textbook, capitalism controls the means of production and distribution through
A. public ownership in private hands.
B. public welfare and private profit.
C. free market socialism
D. private ownership.

11. A corporation's members are financially liable for corporate debts only up to the extent of their investments. This concept is known as
A. limited liability.
B. social responsibility.
C. corporate responsibility.
D. institutionalized ethics.

12. Craig and Karen are discussing the relationship of ethical codes and economic efficiency. Craig, taking the position of economist Milton Friedman, argues that businesses should be concerned primarily with profits. Karen, taking the position of economist Kenneth Arrow, argues that under certain conditions, the goal of maximizing profits is socially inefficient. Which of the following statements is correct?
A. Only Karen is correct.
B. Only Craig is correct.
C. Neither Craig nor Karen is correct.
D. Both Craig and Karen are correct.

13. You would most properly associate Cornelius Vanderbilt, Cyrus McCormick, and John D. Rockefeller with the rise of _______ capitalism.
A. global
B. mercantile
C. industrial
D. finance

14. Which of the following describes the pattern of shared values and beliefs in a corporation that gives members meaning and that provides them with rules for behavior?
A. Corporate longevity
B. Corporate strategy
C. Corporate tactics
D. Corporate culture

15. If you agree with the position of economist Kenneth Arrow, you would say that
A. it's profitable for buyers and sellers to have the same level of information.
B. businesses should be concerned primarily with profits.
C. maximizing profits is often socially inefficient.
D. businesses are ethically entitled to externalize social costs.

16. Under changes in management policy, Sears instituted work quotas and a high-pressure environment that encouraged employees to mislead customers into purchasing unneeded services. This case helps us understand the ethical and moral significance of corporate
A. culture.
B. strategy.
C. responsibility.
D. liability.

17. According to Karl Marx, the separation of individuals from the objects they create is known as worker
A. destabilization.
B. outsourcing.
C. alienation.
D. exploitation.

18. If you reject a narrow view of corporate fiduciary responsibility, you would agree that corporations have
A. responsibilities to all those who are impacted by their actions.
B. no necessary good-faith responsibility to any stakeholders.
C. a primary responsibility to shareholders.
D. a primary responsibility to employees, not shareholders.

19. According to Adam Smith, the human disposition to trade and barter leads to the _______ of labor,
which in turn is the primary means for increasing economic productivity.
A. specification
B. necessity
C. division
D. reduction

20. Within a modern corporate organization, individual responsibility tends to vanish
A. because no one in an organization has any sense of moral responsibility.
B. because of the actions of a few "bad apples."
C. due to a diffusion of responsibility.
D. as a result of public apathy.