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Law, Business and Society 11th Edition Test Bank

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    Chapter 01 – Capitalism and the role of government Chapter 01 Capitalism and the Role of Government True/False Questions 1. The American financial community’s near collapse in late 2008 had been most directly ignited by the subprime mortgage crisis. Answer : True AACSB: Analytical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 01 - 01 Describe capitalism and its relationship to individual rights. Topic: Capitalism Challenged: Economics Feedback: The American financial community’s near collapse in 2008 had been most directly ignited by the subprime mortgage crisis; a situation in which the nation’s housing bubble burst and millions of Americans were no longer able to pay their home mortgages. Instead of continuing their sometimes meteoric rise in value, those homes had plunged in price and much of the total real estate market had essentially imploded. 2. Capitalism in America was built on the strong philosophical foundation of personal freedom and private property rights. Answer: True AACSB: Analytical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 01 - 01 Describe capitalism and its relationship to individual rights. Topic: Purpose: What Do We Hope to Accomplish? Feedback: Capitalism in America was built on the strong philosophical foundation of personal freedom and private property rights. Our great natural resources and personal ambition led to extraordinary prosperity. 3. Democratic capitalism and state capitalism trade with each other for mutual advantage but are economic and political rivals. Answer : True AACSB: Analytical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 01 - 02 Compare and contrast capitalism and collectivism. Topic: Too Much Capitalism? Or Too Little? Feedback: Democratic capitalism and state capitalism trade with each other for mutual advantage but are economic and political rivals. Democratic capitalism in the United States, Japan, Denmark, and other nations favors business to create wealth and government to regulate as needed. State capitalism in countries such as China, Russia, and Saudi Arabia employs the market to build wealth, which, in turn, is controlled and distributed by the state

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    Chapter 01 – Capitalism and the role of government for its political purposes. 4. Capitalism features economic cooperation and varying degrees of centralized control. Answer: False AACSB: Analytical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 01 - 02 Compare and contrast capitalism and collectivism. Topic: Communism Feedback: Collectivist systems feature economic cooperation and varying degrees of centralized control as contrasted with capitalism’s economic individualism and political freedom. 5. The term collectivism embraces communism and socialism and similar philosophies on the left side of the political or economic spectrum. Answer: True AACSB: Analytical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 01 - 02 Compare and contrast capitalism and collectivism. Topic: Communism Feedback: The term collectivism embraces communism and socialism and similar philosophies on the left side of the political or economic spectrum. Collectivist systems feature economic cooperation and varying degrees of centralized control as contrasted with capitalism’s economic individualism and political freedom. 6. Political scientist Benjamin Barber believes that capitalism drags us into decadence by encouraging us to buy as many unnecessary products as we can manage. Answer: True AACSB: Analytical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 01 - 02 Compare and contrast capitalism and collectivism. Topic: Capitalism Challenged: America in Decline? Feedback: Political scientist Benjamin Barber believes that capitalism drags us into decadence by encouraging us to buy as many unnecessary products as we can manage, thus replacing historical principles of hard work and deferred gratification with infantile hungers for anything that might promise comfort. In America’s version of capitalism, as Barber sees it, we find liberty in commerce. We can buy whatever we want; therefore, we are free. 7. Socialism embraces totalitarianism while calling for aggressive government intervention to correct economic and social ills. Answer: False AACSB: Analytical Thinking Blooms: Remember Difficulty: 1 Easy

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    Chapter 01 – Capitalism and the role of government Learning Objective: 01 - 03 Differentiate between communism and socialism as collectivist philosophies. Topic: Socialism Feedback: Socialists provide one answer by rejecting communist totalitarianism and embracing democracy while calling for aggressive government intervention to correct economic and social ills. Historically, socialism has often been associated with democratic governments and peaceful change, whereas communism has been characterized by totalitarianism and violent revolution. 8. Capitalists fear the irrationality of a society based on competition and unrestrained pursuit of industrial growth. Answer: False AACSB: Analytical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 01 - 03 Differentiate between communism and socialism as collectivist philosophies. Topic: Socialism Feedback: Socialists fear the “irrationality” of a society based on competition and unrestrained pursuit of industrial growth. One of the elements of the socialist agenda is rationality. 9. Capitalists consider class distinctions unjust. Answer: False AACSB: Analytical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 01 - 03 Differentiate between communism and socialism as collectivist philosophies. Topic: Socialism Feedback: Class distinctions are anathema to the socialist. All humans are equally meritorious, and distinctions among them are inherently unjust. 10. Communists are convinced that problems of market failure mean that the free market is simply incapable of meeting the needs of all segments of society. Answer: False AACSB: Analytical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 01 - 03 Differentiate between communism and socialism as collectivist philosophies. Topic: Socialism Feedback: A critical distinction between socialists and capitalists is that the former believe a society’s broad directions should be carefully planned rather than left to what some take to be the whimsy of the market. Furthermore, socialists are convinced that problems of market failure (inadequate information, monopoly, externalities, public goods, and so on) mean that

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    Chapter 01 – Capitalism and the role of government the free market is simply incapable of meeting the needs of all segments of society. 11. To pay for its comprehensive welfare benefits, the United States takes 50.1 percent of its national income in taxes, the highest rate of any industrialized nation. Answer: False AACSB: Analytical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 01 - 04 Evaluate arguments regarding government’s proper role in the global, technology - based economy. Topic: American Capitalism in Europe? Feedback: To pay for its cradle - to - grave welfare benefits, Sweden takes about 45 percent of its national income (gross domestic product - GDP) in taxes, while the United States, in contrast, has one of the developed world’s lowest total tax burdens at about 27 percent of GDP in recent decades, but down to about 24 percent during the recession. 12. Sweden and the other Scandinavian states rely on wise government spending as their key ingredient in a successful market - based economy. Answer: True AACSB: Analytical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 01 - 05 Describe the primary characteristics of a “mixed economy.”. Topic: American Capitalism in Europe? Feedback: For Sweden and the other Scandinavian states, wise government spending is a key ingredient in a successful market - based economy. We should remember, of course, that Sweden is a small, homogeneous nation. Replicating its policies in the United States would be difficult. 13. The pure free market approach adds all forms of government including regulatory agencies, consumer protection, environmental rules, and antitrust law to our business system and our society. Answer: False AACSB: Analytical Thinking Blooms: Understand Difficulty: 2 Medium Learning Objective: 01 - 05 Describe the primary characteristics of a “mixed economy.” Topic: Purpose: What Do We Hope to Accomplish? Feedback: The pure free market approach assumes that we can operate our business system and our society at large free of all but foundational legal mechanisms such as contract and criminal law. Most forms of government including regulatory agencies, consumer protection, environmental rules, occupational licensure, zoning restrictions, antitrust law, and all but the most basic government services would be eliminated. 14. American capitalism, despite its extraordinary success, is criticized for problems of poverty, inequality, and unfairness.

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    Chapter 01 – Capitalism and the role of government Answer: True AACSB: Analytical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 01 - 06 Analyze the impact of capitalism on equality, fairness, and community in American and global society Topic: The American Dream at Risk? Feedback: American capitalism, despite its extraordinary success, is criticized for problems of poverty, inequality, and unfairness, among others. The market is driven by and rewards individual achievement. 15. It is a well - known fact that the United States ranks well on standard social measures and not so well on standard economic measures. Answer: False AACSB: Analytical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 01 - 06 Analyze the impact of capitalism on equality, fairness, and community in American and global society. Topic: The American Dream at Risk? Feedback: In general, the United States ranks well on standard economic measures and not so well on standard social measures. America’s 2012 estimated GDP per capita of $50,700 ranked 14th in the world behind smaller, more specialized economies such as Qatar (1st at $103,900) and Norway (9th at $55,900) but (as it is showing contrast) well ahead of our chief industrial rivals such as Germany (29 th at $39,700) and Japan (38th at $36,900). 16. Taking the privatization movement a step further, state and local governments are selling or leasing existing roads to private companies. Answer: True AACSB: Analytical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 01 - 07 Discuss the theory and practice of privatization. Topic: Capitalism in Practice — “Privatization” in America and Abroad Feedback: Private companies are building, maintaining, and operating new toll roads in places such as northern Virginia and suburban San Diego to the Mexican border. Taking the privatization movement a step further, state, and local governments are selling or leasing existing roads to private companies. Indiana, for example, leased its 157 - mile Indiana East – West Toll Road to an international group for $3.8 billion for 75 years. 17. Privatization often brings substantially reduced costs and improved expertise. Answer: True AACSB: Analytical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 01 - 07 Discuss the theory and practice of privatization.

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    Chapter 01 – Capitalism and the role of government Topic: Capitalism in Practice — “Privatization” in America and Abroad Feedback: Privatization often brings substantially reduced costs and improved expertise, but sometimes the transition does not work well. Fury might be the best word to describe consumer reaction to the higher rates and poor service that accompanied Chicago’s parking meter privatization, but Indiana has used the money from its toll road leases to fund a popular, 10 - year highway improvement program. 18. China’s reliance on cheap labor to drive its economy still remains unchallenged as other nations are unable to undercut the Chinese advantage. Answer: False AACSB: Analytical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 01 - 08 Discuss the current state of capitalism in China and Russia. Topic: Coping with Capitalism — China and Russia Feedback: China’s reliance on cheap labor to drive its economy is threatened as other nations are able to undercut the Chinese advantage. Despite China’s renewed global prominence and its stunning economic advances, record numbers of professionals reportedly leave annually. 19. Extravagant wealth, side - by - side with punishing poverty, is perhaps the greatest disappointment and injustice, from the critics’ point of view, in the global advance of capitalist principles. Answer: True AACSB: Analytical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 01 - 09 Describe the income and wealth gaps in America. Topic: The American Dream at Risk? Feedback: Extravagant wealth, side - by - side with punishing poverty, is perhaps the greatest disappointment and injustice, from the critics’ point of view, in the global advance of capitalist principles. The wealthiest 1 percent of Americans now have a greater collective net worth than the bottom 90 percent. Multiple Choice Questions 20. In the context of capitalism in America, which of the following most likely led the government to curb the power of big business? A. Poor foundation of personal freedom B. Lack of private property rights C. Emergence of monopolistic abuse D. Lack of natural resources Answer: C AACSB: Analytical Thinking Blooms: Understand Difficulty: 2 Medium

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    Chapter 01 – Capitalism and the role of government Learning Objective: 01 - 01 Describe capitalism and its relationship to individual rights. Topic: Purpose: What Do We Hope to Accomplish? Feedback: Capitalism in America was built on the strong philosophical foundation of personal freedom and private property rights. Our great natural resources and personal ambition led to extraordinary prosperity. Monopolistic abuse followed, however, and government grew to curb the power of big business. Thus, America’s substantially free market was gradually constrained by government regulation. 21. _____ in the United States, Japan, Denmark, and other nations favors business to create wealth and government to regulate as needed. A. Democratic capitalism B. State capitalism C. Religious socialism D. Regional socialism Answer: A AACSB: Analytical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 01 - 02 Compare and contrast capitalism and collectivism. Topic: Too Much Capitalism? Or Too Little? Feedback: Democratic capitalism in the United States, Japan, Denmark, and other nations favors business to create wealth and government to regulate as needed. State capitalism in countries such as China, Russia, and Saudi Arabia employs the market to build wealth, which, in turn, is controlled and distributed by the state for its political purposes. 22. ____ in countries such as Russia, China, and Saudi Arabia employs the market to build wealth, which, in turn, is controlled and distributed by the state for its political purposes. A. Regional socialism B. Democratic capitalism C. State capitalism D. Religious socialism Answer: C AACSB: Analytical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 01 - 08 Discuss the current state of capitalism in China and Russia.. Topic: Too Much Capitalism? Or Too Little? Feedback: State capitalism in countries such as China, Russia, and Saudi Arabia employs the market to build wealth, which, in turn, is controlled and distributed by the state for its political purposes. 23. Which of the following countries follows a communist form of government? A. The United States B. Australia C. China D. The United Kingdom

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    Chapter 01 – Capitalism and the role of government Answer: C AACSB: Analytical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 01 - 03 Differentiate between communism and socialism as collectivist philosophies. Topic: Communism Feedback: China follows a communist form of government. Although China, Cuba, North Korea, Vietnam, and a few other nations continue to practice communism, the balance of the world has clearly rejected Marxist - Leninist totalitarianism. China is rapidly and enthusiastically embracing free market practices, with continuing state direction; a strategy that some label state capitalism. 24. _____ was particularly concerned about the growing imbalance between rich and poor and felt that the pursuit of wealth and self - interest would erode society’s moral core. A. Ayn Rand B. Bo Xilai C. Karl Marx D. Anatole Kaletsky Answer: C AACSB: Analytical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 01 - 03 Differentiate between communism and socialism as collectivist philosophies. Topic: Communism Feedback: Karl Marx’s central message concerns the severe abuses that can accompany unrestrained capitalism. Marx was particularly concerned about the growing imbalance between rich and poor. Moreover, he felt that the pursuit of wealth and self - interest would erode society’s moral core. 25. Socialism has been associated with _____. A. self - interest and strong pursuit of individual wealth B. democratic governments and peaceful change C. totalitarianism and violent revolution D. economic individualism Answer: B AACSB: Analytical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 01 - 03 Differentiate between communism and socialism as collectivist philosophies. Topic: Socialism Feedback: Socialists provide one answer by rejecting communist totalitarianism and embracing democracy while calling for aggressive government intervention to correct economic and social ills. Historically, socialism has often been associated with democratic

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    Chapter 01 – Capitalism and the role of government governments and peaceful change, whereas communism has been characterized by totalitarianism and violent revolution. 26. Identify the correct statement regarding socialists. A. They aim to retain the benefits of industrialism while abolishing the social costs often accompanying the free market. B. They reserve much of their concern for the condition of the middle and higher classes. C. They reject the need for aggressive government intervention to correct economic and social ills. D. They embrace communist totalitarianism and reject democracy. Answer: A AACSB: Analytical Thinking Blooms: Understand Difficulty: 2 Medium Learning Objective: 01 - 03 Differentiate between communism and socialism as collectivist philosophies. Topic: Socialism Feedback: Socialists aim to retain the benefits of industrialism while abolishing the social costs often accompanying the free market. The government is likely to be directly involved in regulating growth, inflation, and unemployment. 27. Which of the following statements about socialists is true? A. Socialists feel that the economy must be directed toward the welfare of the successful capitalists. B. Socialists reserve much of their concern for the condition of the higher class. C. The harshness of working life is not objected by socialists. D. Class distinctions are anathema to socialists. Answer: D AACSB: Analytical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 01 - 03 Differentiate between communism and socialism as collectivist philosophies. Topic: Socialism Feedback: Class distinctions are anathema to socialists. All humans are equally meritorious, and distinctions among them are inherently unjust. 28. Which of the following statements corresponds to Karl Marx’s beliefs? A. The mode of production in material life determines the general character of the social, political, and spiritual processes of life. B. Unrestrained capitalism would do the society good. C. The pursuit of wealth and self - interest by individuals will continuously build the society’s moral core. D. Competition and unrestrained pursuit of industrial growth is essential for the welfare of the capitalists. Answer: A

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    Chapter 01 – Capitalism and the role of government AACSB: Analytical Thinking Blooms: Understand Difficulty: 2 Medium Learning Objective: 01 - 03 Differentiate between communism and socialism as collectivist philosophies. Topic: Communism Feedback: Karl Marx was particularly concerned about the growing imbalance between rich and poor. Moreover, he felt that the pursuit of wealth and self - interest would erode society’s moral core. Marx built an economic interpretation of history, arguing that “the mode of production in material life determines the general character of the social, political, and spiritual processes of life.” 29. Which of the following is true of Robert Putnam’s observations on social capital? A. Putnam observed that the practice of free market principles is essential for a moral life. B. Putnam observed that a sharp rise was seen in league bowling from 1980 to 2000, although the number of bowlers decreased by about 10 percent. C. Putnam observed that virtually every measure of social interaction fell significantly from roughly 1975 to 2000. D. Putnam observed that only three categories of government were necessary: the police, the armed services, and the law courts. Answer: C AACSB: Analytical Thinking Blooms: Understand Difficulty: 2 Medium Learning Objective: 01 - 09 Discuss the income and wealth gaps in America.Topic: The American Dream at Risk? Feedback: Robert Putnam’s book explains that virtually every measure of social interaction, from voting to picnics to playing cards, to church attendance, to membership in social clubs fell significantly from roughly 1975 to 2000. The most vivid example was a decline of 40 percent in league bowling from 1980 to 2000 although the total number of bowlers increased by about 10 percent; thus the notion of “bowling alone.” 30. Identify the underlying reason why socialists advocate income supports, free education, free health care, generous sick pay, and family planning. A. Socialists believe that the economy must be directed toward the general interest rather than left free to multiply the welfare of successful capitalists. B. Socialists seek an excessively individualistic approach to life where the communitarian approach of capitalism is muted by a concern for the welfare of all. C. Socialists believe that communism harshly restrains individual freedom and creates a society based on unrestrained pursuit of industrial growth. D. Socialists seek to embrace totalitarianism while calling for aggressive government intervention. Answer: A AACSB: Analytical Thinking Blooms: Understand Difficulty: 2 Medium

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    Chapter 01 – Capitalism and the role of government Learning Objective: 01 - 03 Differentiate between communism and socialism as collectivist philosophies. Topic: Socialism Feedback: Socialists believe that the economy must be directed toward the general interest rather than left free to multiply the welfare of successful capitalists. Hence, socialists advocate income supports, free education, free health care, generous sick pay, family planning, and the like to correct the failures of capitalism. 31. Which of the following views was advocated by Ayn Rand, the philosopher and novelist? A. The necessary categories of government were only three in number: the police, the armed services, and the law courts. B. The practice of free market principles is not needed for a rational, moral life. C. The mode of production in material life determines the general character of the social, political, and spiritual processes of life. D. The theory of market fundamentalism is a greater threat to open society today than communism. Answer: A AACSB: Analytical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 01 - 04 Evaluate arguments regarding government’s proper role in the global, technology - based economy. Topic: Purpose: What Do We Hope to Accomplish? Feedback: The controversial philosopher and novelist Ayn Rand was an uncompromising advocate of free market principles. She believed the necessary categories of government were only three in number: the police, the armed services, and the law courts. 32. The proper balance between _____ remains the central public policy debate in American life. A. open markets and government intervention B. personal freedom and private property rights C. natural resources and personal ambition D. intellectual freedom and social order Answer: A AACSB: Analytical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 01 - 04 Evaluate arguments regarding government’s proper role in the global, technology - based economy. Topic: Purpose: What Do We Hope to Accomplish? Feedback: America’s substantially free market was constrained by government regulation. The proper balance between open markets and government intervention remains perhaps the central public policy debate in American life. 33. What efforts have been made by Sweden to keep its economy healthy? A. It has taken an aggressive cowboy capitalism approach.

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    Chapter 01 – Capitalism and the role of government B. It has followed a policy of comparatively low corporate taxes. C. It has permitted the sale or lease of public assets to private parties. D. It has attracted billions in private sector investment to take over a few dozen state - controlled companies. Answer: B AACSB: Analytical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 01 - 04 Evaluate arguments regarding government’s proper role in the global, technology - based economy. Topic: American Capitalism in Europe? Feedback: In order to keep its economy healthy, Sweden has followed a policy of comparatively low total corporate taxes (22 percent as compared with a U.S. rate of 39.2 percent, federal and state combined, although with loopholes included, the U.S. effective rate is an estimated 29.2 percent). 34. Which of the following is most likely to be a result of a country maintaining its core welfare commitment in combination with an entrepreneurial spirit? A. An economy of relatively low unemployment, low inflation, and high GDP growth B. An economy that is impoverished and filled with inequality C. An economy encompassing poverty, oppression, and the rich - poor gap D. An economy that has only state - dominated companies with high employment due to the encouragement of welfare over work Answer: A AACSB: Analytical Thinking Blooms: Understand Difficulty: 2 Medium Learning Objective: 01 - 05 Describe the primary characteristics of a “mixed economy.” (or both?). Topic: American Capitalism in Europe? Feedback: The pressure of globalization has been felt in Sweden where a more moderate and somewhat right - center government has pushed aside the left - leaning Social Democrats and has significantly lowered taxes, privatized some state - dominated companies, and reduced unemployment by encouraging work over welfare. The result is an economy of relatively low unemployment, low inflation, and high GDP growth. 35. In terms of markets and governments, the United States: A. has more faith in government planning. B. has placed less faith in the market. C. chose a capitalist, democratic approach to life. D. reflects a preference for greater central authority. Answer: C AACSB: Analytical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 01 - 05 Describe the primary characteristics of a “mixed economy.”

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    Chapter 01 – Capitalism and the role of government Topic: Purpose: What Do We Hope to Accomplish? Feedback: America’s system of laws can be understood with a firm appreciation for the principles of capitalism from which those laws spring. The United States has embraced an evolving capitalist, democratic approach to life. 36. In the context of economic systems, the “Third Way” refers to _____. A. totalitarianism B. market socialism C. capitalism D. communism Answer: B AACSB: Analytical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 01 - 05 Describe the primary characteristics of a “mixed economy.” Topic: American Capitalism in Europe? Feedback: For years, the Nordic states of Sweden, Norway, Denmark, and Finland practiced their market socialism or social democracy with such success that it was labeled a “Third Way” between the harsher extremes of capitalism and communism. Their welfare states provided healthy economic growth with cradle - to - grave social care for all in a system emphasizing the collective welfare over individual preferences. 37. Which of the following countries followed the “Third Way” between the harsher extremes of capitalism and communism? A. Sweden B. U.S.A C. China D. Russia Answer: A AACSB: Analytical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 01 - 05 Describe the primary characteristics of a “mixed economy.” Topic: American Capitalism in Europe? Feedback: For years, the Nordic states of Sweden, Norway, Denmark, and Finland practiced their market socialism or social democracy with such success that it was labeled a “Third Way” between the harsher extremes of capitalism and communism. Their welfare states provided healthy economic growth with cradle - to - grave social care for all in a system emphasizing the collective welfare over individual preferences. 38. The pure free market approach assumes that: A. less faith should be placed in the market and more in government planning. B. legal systems in all countries should reflect a preference for greater central authority. C. centralized authority will result in a free government and economy free of corruption. D. business structures and societies can be operated at large free of all but foundational legal mechanisms.

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    Chapter 01 – Capitalism and the role of government Answer: D AACSB: Analytical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 01 - 01 Describe capitalism and its relationship to individual rights. Topic: Purpose: What Do We Hope to Accomplish? Feedback: The pure free market approach assumes that we can operate our business system and our society at large free of all but foundational legal mechanisms such as contract and criminal law. The wisdom of the market — our individual judgments, in combination with our individual consciences — would “regulate” American life. 39. Which of the following is true of the criticisms of Robert Putnam’s thesis? A. Robert Putnam was criticized for focusing too much on older activities such as social clubs. B. Robert Putnam was criticized for focusing too much on emerging interests such as Internet groups. C. Robert Putnam was criticized for his belief that the necessary categories of government were only three in number: the police, the armed services, and the law courts. D. Robert Putnam was criticized for his belief that state capitalism as practiced in Russia can succeed in the face of political repression, routine corruption, and abuse of the rule of law. Answer: A AACSB: Analytical Thinking Blooms: Understand Difficulty: 2 Medium Learning Objective: 01 - 06 Analyze the impact of capitalism on equality, fairness, and community in American and global society. Topic: The American Dream at Risk? Feedback: Criticism of Robert Putnam’s thesis was abundant with many saying he focused too much on “older” activities such as social clubs and not enough on emerging interests such as Internet groups. Putnam’s more recent research has produced no convincing evidence of rising community engagement among adults, but he acknowledges they are reaching one another in different ways from the past, principally through social media. 40. Identify the result of a growing gap in opportunities among socioeconomic classes of American children. A. Children of the well - off express increasing trust in those around them. B. Participation in extracurricular activities has fallen sharply for affluent children. C. Young products of affluent America have withdrawn or never undertaken community engagement. D. Overall community engagement gap between whites and blacks is narrow. Answer: A AACSB: Analytical Thinking Blooms: Understand Difficulty: 2 Medium Learning Objective: 01 - 09 Describe the income and wealth gaps in America. Topic: The American Dream at Risk?

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    Chapter 01 – Capitalism and the role of government Feedback: A generation ago, Robert Putnam says, participation in extracurricular activities varied little by social class, but today participation has risen sharply for affluent children while falling sharply among those less well - off. One of the results of this opportunity divide is that children of the well - off express increasing trust in those around them while that trust has “collapsed” among the less well - off children. 41. Which of the following involves making a service more expensive at times of peak demand in order to curb that demand? A. Median pricing B. Clearance pricing C. Predatory pricing D. Congestion pricing Answer: D AACSB: Analytical Thinking Blooms: Remember Difficulty: 1 Easy Learning Objective: 01 - 07 Discuss the theory and practice of privatization. Topic: Capitalism in Practice — “Privatization” in America and Abroad Feedback: While adding to and upgrading infrastructure through privatization, governments and their agents are also turning to pricing or market mechanisms to reduce demand for that infrastructure. One expanding initiative is congestion pricing that involves making a service more expensive at times of peak demand in order to curb that demand. 42. Identify a reason why some parents and school boards have adopted a free market “fix.” A. Parents and school boards are convinced that replacing merit - based admission with an auction allowing space to the highest bidders is the only way to raise the academic profile of an educational institution. B. Parents and school boards hope that competition will push all schools to higher achievement levels. C. Studies reveal that achievement growth rates were twice as high in districts with a free market fix than in standard public schools. D. Studies carried out in other countries reveal that market - based approaches such as open enrollment and charter schools work better than direct payment to students of $100 to $500 per year for improved performance. Answer: B AACSB: Analytical Thinking Blooms: Understand Difficulty: 2 Medium Learning Objective: 01 - 07 Discuss the theory and practice of privatization. Topic: Capitalism in Practice — “Privatization” in America and Abroad Feedback: The idea that capitalism was the answer to poor school performance was unthinkable a few decades ago, but some increasingly frustrated parents and school boards have adopted a free market “fix.” Schools are experimenting with market - based approaches such as for - profit web - based classes, open enrollment, charter schools, and vouchers. The hope is that competition will push all schools to higher achievement levels.

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