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
