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Name:
Class:
Date:
Chapter 4 - The Nature of Capitalism
1. Which of the following historical stages of capitalism came first?
a.
financial
b.
mercantile
c.
industrial
d.
state welfare
2. The profit motive
a.
is a fundamental feature of all societies.
b.
is no longer a key feature of capitalism.
c.
must be checked by competition if society is to benefit.
d.
is basically immoral.
3. A basic tenet of capitalism is that
a.
property refers only to physical objects.
b.
ownership is a simple relationship between a person and the thing owned.
c.
capitalism requires private ownership of the major means of production.
d.
in the 21st century, capitalism no longer requires capital.
4. The concept of the "invisible hand" means
a.
each person's private pursuit of wealth will result in the most beneficial overall organization and distribution of
economic resources.
b.
although it can't be seen, the hand of government controls the economy and exerts a beneficial pressure that
promotes economic welfare.
c.
feudalism inevitably gives rise to capitalism.
d.
externalities must be internalized.
5. A basic premise of Adam Smith's is
a.
human beings try to avoid acquisitive behavior.
b.
when people are left to pursue their own economic interests, disaster looms.
c.
the division of labor, though good for the firm, reduces overall efficiency.
d.
we can secure what we need from others only by offering them something they need from us.
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Class:
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Chapter 4 - The Nature of Capitalism
6. One of the four key features of capitalism is
a.
favoritism.
b.
cooperation.
c.
inequality.
d.
private property.
7. Capitalism operates on the debatable assumption that human beings find increased well-being through
a.
production of equality.
b.
eliminating poverty.
c.
greater material consumption.
d.
a higher sense of purpose.
8. One reason for believing that in practice capitalism fails to live up to its own ideal of competition is
a.
government subsidies and protective tariffs.
b.
monopolies control almost all areas of economic life.
c.
so many small companies go bankrupt.
d.
the outsourcing of jobs.
9. Karl Marx believed that
a.
under capitalism workers are alienated in several ways.
b.
capitalism no longer exploits workers.
c.
industrialization does away with alienation.
d.
workers are alienated from their products, but not from themselves or other people.
10. In contrast to traditional manufacturers, many companies have become hollow corporations who
a.
increase their manufacturing operations in the U.S.
b.
prefer their own production base and not a network of small operators both foreign and domestic.
Name:
Class:
Date:
Chapter 4 - The Nature of Capitalism
c.
make nearly all crucial parts.
d.
outsource and likely produce only the package and the label .
11. An exclusive focus on short-term performance
a.
is the best guarantee of a company's long-term performance.
b.
has helped to create a high-pressure environment conducive to fraud.
c.
encourages long-term research and development.
d.
hurts stock prices.
12. Evidence for the idea that American manufacturing is declining is
a.
the fact that government now employs more people than manufacturing.
b.
a reluctance to outsource.
c.
fewer "hollow" corporations.
d.
a shrinking trade deficit.
13. According to one survey of cultural values
a.
Americans value work more than Japanese do.
b.
for Americans, only good health is more important than work.
c.
Americans typically value things like their children's education and a satisfactory love life more than work.
d.
Americans place no value on work, only on money.
14. Which statement best describes capitalism?
a.
Capitalism is an economic system in which the means of production and distribution is in state hands.
b.
Capitalism is an economic system that operates under the profit motive.
c.
Capitalism is an economic system that dispenses with competition.
d.
Capitalism is an economic system where the profits generated belong to the state as a whole.
15. Which of the following is an accurate statement?
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Chapter 4 - The Nature of Capitalism
a.
Adam Smith defends capitalism by appealing to the idea of a natural, moral right to property.
b.
Adam Smith denies that human beings are, by nature, acquisitive creatures.
c.
common defense of capitalism is the argument that people have a fundamental moral right to property and that
our capitalist system is simply the outcome of this natural right.
d.
Utilitarians oppose capitalism in principle.
16. Marxism states
a.
capitalism leads to a concentration of property and thus a concentration of resources and power in relatively
few hands.
b.
socialism will eventually be replaced by financial capitalism.
c.
the means of production should be placed under the control of the bourgeoisie.
d.
only workers who are poorly paid in a capitalist system are alienated.
17. Which of the following accurately reflects the concept of Marxism?
a.
It is only within a capitalist economic system that workers are not alienated from the products of their labor.
b.
Only workers who are poorly paid for their labor are alienated.
c.
Within a capitalist economic system, the activity of labor is an end in itself and, as a result, has intrinsic value.
d.
Labor is alienated in a capitalist economic system (in part) because the labor of a worker stands opposed to the
worker as an autonomous power.
18. Which statement creates the best picture of capitalism?
a.
Industrial capitalism is characterized by pools, trusts, holding companies and an interpenetration of banking,
insurance and industrial interests.
b.
Mercantile capitalism emerged in the United States in the period directly following the civil war.
c.
In state welfare capitalism the government plays an active role in regulating economic activities in an effort to
smooth out the boom-and-bust pattern of the business cycle.
d.
Financial capitalism developed in the period immediately prior to the Renaissance.
19. For employees who are paid handsomely for their efforts, Marx said their work would ultimately prove to be
a.
profitable to them.
b.
expensive to them.
c.
meaningless to them.
d.
tireless.
20. For the first time since the Industrial Revolution, less than _____ percent of the American workforce was employed
by manufacturing.
a.
10
b.
25
c.
50
d.
62
21. Though many jobs are outsourced, most economists believe
a.
Mexico is the place to work.
b.
the United States is in trouble.
c.
the economy will create new jobs.
d.
manufacturing will make a comeback.
22. Many economists are concerned that the growing trade deficit makes the U.S. vulnerable to
a.
terrorist attacks.
b.
depression.
c.
ease.
d.
economic extortion.
23. Rather than strong work ethic, a more commonly seen role is:
a.
Me - first
b.
Happy days are here to stay
c.
I like it easy
d.
Let the boss sweat it
24. More Americans are putting aside job success to
a.
win the lottery.
b.
be with their families.
c.
get education.
d.
travel abroad.
25. The Fugger dynasty was an example of
a.
industrial capitalism.
b.
mercantile capitalism.
c.
financial capitalism.
d.
globalized capitalism.
26. Worker control socialism is a hybrid economic system with no marketplace and no profits.
a.
True
b.
False
27. Utilitarians reject the very idea of a natural right to property.
a.
True
b.
False
28. If it's true that individuals have a natural right to own property, then there can be no limits on this right.
a.
True
b.
False
29. Some critics believe that "competition is not a good" because trying to do well and trying to beat others are two
different things.
a.
True
b.
False
30. Adam Smith claims that the proper role of governments is to restrict and regulate the self-interested behavior of
business organizations for the common good.
a.
True
b.
False
31. Capitalism is possible without private property.
a.
True
b.
False
32. According to Marx, when workers are alienated they are not truly free.
a.
True
b.
False
33. None of the specific measures proposed by Marx and Engels in the Communist Manifesto have been implemented in
capitalist countries.
a.
True
b.
False
34. According to Adam Smith, individuals have natural endowments that should determine the kind of work they do.
a.
True
b.
False
35. Capital is that money that is invested for the purpose of making more money.
a.
True
b.
False
36. Socialism is an economic system characterized by public ownership of property and a planned economy.
a.
True
b.
False
37. According to Alfie Kohn, competition promotes individual and group achievement better than cooperation.
a.
True
b.
False
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Date:
Chapter 4 - The Nature of Capitalism
38. Outsourcing is a practice where companies buy parts or whole products from other producers, both at home and
abroad.
a.
True
b.
False
39. The capitalism that we know today in the United States is a "pure" form of laissez-faire capitalism.
a.
True
b.
False
40. According to Marx, the best economic system would be one where the means of production and distribution are in the
hands of the bourgeoisie.
a.
True
b.
False
41. Government programs often subsidize American businesses and protect them from competition.
a.
True
b.
False
42. Implicit in capitalism is the view that human beings aim to maximize their economic self-interest.
a.
True
b.
False
43. According to Adam Smith, the division of labor decreases economic activity.
a.
True
b.
False
Name:
Class:
Date:
Chapter 4 - The Nature of Capitalism
44. As a classical moral justification of capitalism, the natural right to property is a utilitarian justification.
a.
True
b.
False
45. The sense of private property that is central to capitalism is the ownership of the means of production and distribution.
a.
True
b.
False
46. What we call capitalism did not fully emerge until the Renaissance in Europe during the 15th and 16th centuries.
a.
True
b.
False
47. Socialism is an economic system characterized by public ownership of the means of production and distribution, and a
planned economy.
a.
True
b.
False
48. The U. S. trade deficit has shrunk significantly in recent decades.
a.
True
b.
False
49. Property ownership involves a generally complex bundle of rights and rules governing how, under what
circumstances, and in what ways both the owner and others can use, possess, dispose of, and have access to the thing in
question.
a.
True
b.
False
50. According to John Stuart Mill, what makes capitalism a desirable economic system is the type of worker-capitalist
relationship inherent in capitalism.
a.
True
b.
False
51. What is the difference between capitalism and socialism? What is "worker control socialism"?
52. What are the five different historical forms of capitalism?
53. What are the four features of capitalism?
54. Sometimes capitalism is defended based on the idea that we have a natural right to property. How might this defense
be criticized?
55. What is the "invisible hand" of Adam Smith?
56. How do defenders of capitalism respond to critics who point to the profound economic inequalities that characterize
capitalist society?
57. Why do some critics of competition believe that it isn't all that it's cracked up to be?
58. What reason is there for thinking that American manufacturing is declining?
59. What does it mean to say that American companies are too focused on the short term?
60. What is capitalism's view of human nature?
61. Explain the correlation between job security and work ethic now and in the past.
62. Is manufacturing vital to the success and well being of America? Justify your answer
63. Is Walmart a positive or negative influence on the American economy? Justify your position with information from
the “One Nation Under Walmart” article
64. Explain how the tenets of Buddha fit or differ with the American economic system.
65. How can you justify the role of “sweatshops” after reading the article, “In Defense of International
Sweatshops.”? Defend your position with facts.
