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TEST BANK Chapter 3
business ethics (BUS213)
Girne Amerikan Üniversitesi
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Chapter 3
Velasquez Test Bank
MULTIPLE CHOICE
- Distributing goods and services, and determining which members of society will receive what, is one of the tasks that must be achieved to have a. a utilitarian economy. b. an economic system. c. free trade. d. globalization.
Answer: B Topic: Globalization and the Business System Learning Objective: 3: Explain the impact of globalization on the business system Skill Level: Understand the Concepts Difficulty Level: Moderate
- Which of the following best describes how contemporary societies carry out the production of goods and services, and the distribution of these goods in society? a. Commands b. Debate c. Free trade d. Traditions
Answer: A Topic: Globalization and the Business System Learning Objective: 3: Explain the impact of globalization on the business system Skill Level: Understand the Concepts Difficulty Level: Moderate
- A system of normative beliefs that are shared by members of a social group are referred to as a. free markets. b. perfect freedom. c. globalization. d. ideology.
Answer: D Topic: Globalization and the Business System Learning Objective: 3: Explain the impact of globalization on the business system Skill Level: Apply what you know Difficulty Level: Easy
- John Locke’s argument for free markets is based on which theory? a. Utilitarian b. Human nature c. Moral rights d. Values
Answer: C Topic: Globalization and the Business System Learning Objective: 3: Explain the impact of globalization on the business system Skill Level: Apply what you know Difficulty Level: Moderate
- According to John Locke, if there were no governments, what civil liberties would human beings have? a. Aggregate demand b. Invisible hand welfare c. Natural rights d. Market resource allocation
Answer: C Topic: Free Markets and Rights: John Locke Learning Objective: 3: Analyze John Locke’s theory of natural rights as it relates to free markets Skill Level: Apply what you know Difficulty Level: Moderate
- According to John Locke, ________ is the right to depose of possessions and persons as one sees fit. a. a negative right b. a state of perfect freedom c. a community right d. the invisible hand of market competition
Answer: B Topic: Free Markets and Rights: John Locke Learning Objective: 3: Analyze John Locke’s theory of natural rights as it relates to free markets Skill Level: Analyze it Difficulty Level: Moderate
- According to Adam Smith’s view of the supply and demand process, how do consumers affect the price of a commodity? a. When there is not enough supply, consumers will bid the price of an item above the natural price. b. Producers reap greater profits when the price of the commodity is set below the natural price. c. When there is a shortage of a commodity, the price will sink to its natural level. d. Producers strive to achieve a natural pricing level in order to promote social utility.
Answer: A Topic: Free Markets and Utility: Adam Smith Learning Objective: 3: Assess key arguments associated with Adam Smith’s utilitarian view of free markets Skill Level: Analyze it Difficulty Level: Moderate
- Which of the following best represents Adam Smith’s view of government intervention in advancing public welfare? a. Governments are responsible for intervening when it benefits the middle class. b. Governments should let individuals pursue their own self-interests, and buy and sell whatever they wish. c. Humans do not behave like rational economic creatures and must be forced into such behaviors. d. Governments can influence a consumer’s desire to save, thereby lowering aggregate demand.
Answer: B Topic: Free Markets and Utility: Adam Smith Learning Objective: 3: Assess key arguments associated with Adam Smith’s utilitarian view of free markets Skill Level: Apply what you know Difficulty Level: Moderate
- Which of the following is a key assumption made by Adam Smith? a. Private property is unnecessary to human life. b. Private property encourages societies to look after each other. c. Private property is naturally produced. d. Private property must exist.
Answer: D Topic: Free Markets and Utility: Adam Smith Learning Objective: 3: Assess key arguments associated with Adam Smith’s utilitarian view of free markets Skill Level: Understand the concepts
Difficulty Level: Moderate
- John Maynard Keynes argued that the total demand for goods and services is a combination of three economic sectors. Which of the following represent those three economic sectors? a. Income, interest rates, and economic depressions b. Goods, services, and ideas c. Households, businesses, and governments d. Unemployment, spending, and inflation
Answer: C Topic: Free Markets and Utility: Adam Smith Learning Objective: 3: Assess key arguments associated with Adam Smith’s utilitarian view of free markets Skill Level: Analyze it Difficulty Level: Moderate
- Economist David Ricardo developed one of the most important concepts in international trade theory used today. Ricardo’s idea that globalization and free trade boost economic output is based on a. comparative advantage. b. injustice. c. capitalist economics. d. materialism.
Answer: A Topic: Free Trade and Utility: David Ricardo Learning Objective: 3: Analyze comparative advantage as a foundation for free trade among nations Skill Level: Analyze it Difficulty Level: Difficult
- According to Adam Smith, differences in things such as labor costs, skills, climate, and natural resources create a. comparative advantage. b. opportunity costs. c. free trade. d. absolute advantage.
Answer: D Topic: Free Markets and Utility: Adam Smith Learning Objective: 3: Assess key arguments associated with Adam Smith’s utilitarian view of free markets Skill Level: Understand the concepts
Difficulty Level: Moderate
- According to Karl Marx, in a capitalist economy, what type of alienation is a worker experiencing when the worker is forced to work for someone else and makes money for the owner of the workplace? a. Alienating workers from their own productive work b. Alienating workers from themselves c. Alienating workers by denying them control d. Alienating workers from the products of their labor
Answer: B Topic: A Critique of Free Markets Learning Objective: 3: Interpret Marxist views on the impact on workers of free trade and free markets Skill Level: Analyze it Difficulty Level: Difficult
- According to Karl Marx, which of the following best describes the way a society organizes itself so that it can produce goods? a. Social superstructures b. Historical materialism c. Principles of justice d. Relations of production
Answer: D Topic: A Critique of Free Markets Learning Objective: 3: Interpret Marxist views on the impact on workers of free trade and free markets Skill Level: Apply what you know Difficulty Level: Moderate
- Karl Marx claimed that free markets create inequalities and assume that justice means equality or distribution according to need. What argument do critics of Karl Marx use to dispute his claim? a. True justice requires the presence of free markets. b. Free markets can encourage community instead of creating alienation. c. The principles of justice are difficult to define. d. The benefits of private property are more important than equality.
Answer: B Topic: A Critique of Free Markets Learning Objective: 3: Interpret Marxist views on the impact on workers of free trade and free markets
Skill Level: Analyze it Difficulty Level: Difficult
- Which of the following best describes a combination of government regulation, partially free markets, and limited property rights? a. Capitalism b. Immiseration c. Mixed economy d. Communism
Answer: C Topic: The Mixed Economy, New Forms of Property, and the End of Marxism Learning Objective: 3: Explain the mixed economy and redefinitions of property that affect the business system Skill Level: Understand the concepts Difficulty Level: Moderate
- Which of the following best describes property that consists of nonphysical objects, such as music or information? a. Private property b. Copyright c. Patents d. Intellectual property
Answer: D Topic: The Mixed Economy, New Forms of Property, and the End of Marxism Learning Objective: 3: Explain the mixed economy and redefinitions of property that affect the business system Skill Level: Apply what you know Difficulty Level: Moderate
- Which of the following best describes a copyright? a. An invention of machines, processes, and products that is private property of the individual or organization b. A nonphysical object such as music or a software program. c. A specific expression of an idea owned by a person or organization d. The use of government policies to remedy differences.
Answer: C Topic: The Mixed Economy, New Forms of Property, and the End of Marxism Learning Objective: 3: Explain the mixed economy and redefinitions of property that affect the business system Skill Level: Apply what you know
another. The law of nature says that each has a right to liberty and no one should be subjected to political power of another without consent. All people have rights of ownership over their bodies, their labor, and the products they produce. Topic: Free Markets and Rights: John Locke Learning Objective: 3: Analyze John Locke’s theory of natural rights as it relates to free markets
Discuss John Locke’s idea that, in a state of nature, everyone would be political equals and free of constraints, and how those rights affect American institutions. Sample Answer: Locke never used his idea of natural rights to argue for free markets. However, others have, claiming each person has the right to liberty and property, and that governments must leave individuals free to exchange their labor and their property as they choose. This has a significant influence on American institutions of property. U. law holds that individuals have almost absolute rights to do what they want with their property and the government has only a limited right to interfere. This supports the Fifth Amendment rights of U. citizens, and is derived from the idea that private property rights are established by nature and property rights are generated through labor and trade. Topic: Free Markets and Rights: John Locke Learning Objective: 3: Analyze John Locke’s theory of natural rights as it relates to free markets
According to Adam Smith, how does free market competition provide greater benefits than government interference? Sample Answer: One point of support for free markets is the utilitarian argument that free markets and private property will produce more benefits than any government interference. Free market competition will provide these increased benefits by enticing private business to produce and sell what consumers want and to do this at the lowest possible price. Private businesses will do this by trying to cut costs and reduce resources used. The free market, when working with private business, ensures the economy is producing what consumers want at the lowest possible price point. Smith claims that demand drives profit, and supply causes a rebound in price. Resources are allocated to those industries where they are in the most demand. The role of government is to advance the public welfare, and interventions in the market by the government will serve to interrupt the self-regulating effect of competition, thereby creating either surpluses or shortages. Topic: Free Markets and Utility: Adam Smith Learning Objective: 3: Assess key arguments associated with Adam Smith’s utilitarian view of free markets
Discuss John Maynard Keynes’s criticism of Smith’s free market assumptions. Sample Answer: Smith assumed that market forces would ensure full use of all resources, including labor. All available resources are used and demand always expands to absorb supply. However, Keynes argued that without government intervention, the demand for goods will not be high enough to absorb the supply, creating unemployment and economic
depression. The total demand for goods and services is the sum of demand from households, businesses, and government. Aggregate demand could be less than the aggregate production at full employment levels. This happens when households save instead of spend. However, according to Keynes, as spending falls, so does production, which results in less income for the household (because of reduced hours and layoffs). Keynes feels there must be a point of equilibrium where demand equals supply. Topic: Free Markets and Utility: Adam Smith Learning Objective: 3: Assess key arguments associated with Adam Smith’s utilitarian view of free markets
Discuss how Ricardo’s theory of comparative advantage supports the ideas of globalization and free trade. Sample Answer: Comparative advantage is part of the most significant economic arguments for globalization and free trade. According to Ricardo, globalization is good because specialization and free trade boost total economic output, and everyone can share in the increased output. Ricardo showed that free trade creates prosperity for everyone. If a country specializes in making and exporting goods where opportunity costs are lower than opportunity costs to other nations, the first nation will have comparative advantage. Topic: Free Trade and Utility: David Ricardo Learning Objective: 3: Analyze comparative advantage as a foundation for free trade among nations
Discuss Karl Marx’s view on how capitalist economies alienate workers. Sample Answer: Marx explained that, in capitalism, workers work for someone else. Because the purpose of the work is to make money for the owner, it is not designed to be a fulfilling form of productivity and will not satisfy the workers’ own needs. Workers have no control over the products they make. The employer keeps the finished product and uses it to add to personal profit by selling it. The workers are left with wear and tear the labor inflicts on their body and mind. Workers also have little control over how they must relate to others. Workers must work with whomever the employer tells them to. A worker is forced to compete with other workers for pay and positon. Marx claimed that capitalism convinces workers that fulfillment lies in making more money, and Marx believed money will not satisfy human needs. Topic: A Critique of Free Markets Learning Objective: 3: Interpret Marxist views on the impact on workers of free trade and free markets
Discuss how governments control the various aspects of a mixed economy. Sample Answer: Many economists advocate the retention of market systems and private ownership but suggest modifying them with the use of government regulation to get rid of the most obvious defects. The combination of government regulation, partially free markets, and limited property rights create the mixed economy. The mixed economy retains a market
TEST BANK Chapter 3
Course: business ethics (BUS213)
University: Girne Amerikan Üniversitesi
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