Business & Finance Chapter 19 The 1906 Pure Food and Drug Act provided primarily for protection 

subject Type Homework Help
subject Pages 14
subject Words 3252
subject Authors Al H. Ringleb, Frances L. Edwards, Roger E. Meiners

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True / False
1. The 1906 Pure Food and Drug Act provided primarily for protection against adulteration and misbranding of food
and drugs.
a. True
b. False
2. The 1906 Pure Food and Drug Act was the first step by the federal government to regulate food safety.
a. True
b. False
3. One reason for passage of the Pure Food and Drug Act is the high death rate of soldiers during the Spanish-
American War due to impure food.
a. True
b. False
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4. The Food, Drug and Cosmetic Act of 1938 allowed the FDA to impose pure food standards for the first time.
a. True
b. False
5. The FDA was created in 1914.
a. True
b. False
6. The Food, Drug and Cosmetic Act of 1938 gave the FDA broad powers to regulate food production and prohibit
false advertising of drugs.
a. True
b. False
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7. The Department of Agriculture has primary responsibility for sanitation of foods; the FDA focuses on food
additives.
a. True
b. False
8. The Department of Agriculture has primary responsibility for sanitation of meats and poultry; the FDA has
responsibility for most other foods.
a. True
b. False
9. In U.S. v. LaGrou Distribution System, the government brought criminal charges against LaGrou for allowing rat
contamination of its food warehouses.
a. True
b. False
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10. In U.S. v. LaGrou Distribution System, the government successfully prosecuted LaGrou and its top executives for
allowing rat contamination of its food warehouse.
a. True
b. False
11. In U.S. v. LaGrou Distribution System, the government prosecuted LaGrou and its top executives for allowing rat
contamination of its food warehouse; the court held that while the company could be fined, the executives could not
be held liable without convincing proof of their knowledge of the problem.
a. True
b. False
12. The Delaney Clause (the Food Additives Amendment) allows the FDA to regulate food additives.
a. True
b. False
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13. The Food Quality Protection Act states that food should have a "reasonable certainty of no harm."
a. True
b. False
14. The FDA uses a food purity standard that says that an additive should have no more than a one-in-a-million chance
of causing cancer.
a. True
b. False
15. The Food Quality Protection Act of 1996 states that food should have a "de minimus" chance of harming
consumers.
a. True
b. False
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a. True
b. False
16. The FDA issues standards for nutrition labels on food.
a. True
b. False
17. The FDA requires nutrition labels only on canned or bottled foods sold to the public.
a. True
b. False
18. The FDA determines the legal meaning of terms like "light" and "low fat" when used on food products.
a. True
b. False
19. The FTC determines the legal meaning of terms like "light" and "low fat" when used to advertise food products.
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a. True
b. False
20. Common vitamins-niacin and riboflavin-do not have to be listed on nutrition labels.
a. True
b. False
21. To the FDA "low fat" means less than 10 grams of fat per serving.
a. True
b. False
22. If a product is labeled "fresh" it may either be raw, unprocessed food or frozen food, so long as it was frozen fresh.
a. True
b. False
23. The FDA does not regulate health claims made on food products.
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a. True
b. False
24. No drug may be marketed for sale until the FDA has approved the drug for sale as safe for intended use.
a. True
b. False
25. Most advanced European nations have substantially stronger regulations of drugs than exist in the U.S.
a. True
b. False
26. Making illegal copies of patented drugs is a serious problem for public health around the world.
a. True
b. False
27. Dietary supplements, unlike drugs, are not regulated.
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28. The FDA decides what drugs may be sold as well as what drugs may be sold over the counter and what drugs may
be sold only by prescription.
a. True
b. False
29. Before passage of the 1938 Food, Drug and Cosmetic Act there were no such things as prescription drugs. That is,
people could buy any legal drug.
a. True
b. False
30. It costs an average of about a billion dollars to develop one new drug and clear all FDA rules before marketing the
product.
a. True
b. False
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31. It costs an average of about a billion dollars to develop one new drug and clear all FDA rules. If a drug is not
approved for marketing, the FDA pays the company for the costs of the tests.
a. True
b. False
32. It costs about $25 million and takes an average of 3 years to develop one new drug and clear all FDA rules before
marketing the product.
a. True
b. False
33. It takes about $1 billion for a drug company to develop a new drug to market.
a. True
b. False
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34. Drugs must complete three phases of trials before considered by the FDA for release to the public.
a. True
b. False
35. The Kefauver Amendment of 1962 requires the FDA to approve drugs based on proven effectiveness, not just
safety.
a. True
b. False
36. The Kefauver Amendment of 1962 requires the FDA to approve drugs based on their proven safety.
a. True
b. False
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37. Medical devices are subject to FDA regulation.
a. True
b. False
38. Medical devices approved by the FDA before being sold and then monitored for problems.
a. True
b. False
39. Once the FDA has approved a drug for sale there may be no liability imposed on the drug manufacturers for side-
effects that were revealed during the testing process.
a. True
b. False
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40. In Wyeth v. Levine the Supreme Court held that FDA approval of the warning label on a drug set the federal
standard that was not subject to change without FDA approval.
a. True
b. False
41. In Wyeth v. Levine the Supreme Court held that FDA approval of the warning label on a drug set the federal
safety standard that precluded a safety claim brought under state law.
a. True
b. False
42. In Wyeth v. Levine the Supreme Court held that FDA approval of the warning label on a drug did not mean the
drug maker was not responsible for updating the label to include new relevant safety information.
a. True
b. False
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43. In Wyeth v. Levine the Supreme Court held that FDA approval of the warning label on a drug did not mean the
drug maker could not be sued for having an inadequate warning label on the drug.
a. True
b. False
44. If a person is injured by a drug because a physician gives an improper dose, the maker may be protected from
liability under the "learned intermediary" doctrine.
a. True
b. False
45. Once the FDA approves a drug for the market, it has no further power to control the sale of that drug except to
issue public warnings.
a. True
b. False
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46. The FDA may seize shipments of products that are falsely labeled.
a. True
b. False
47. The FDA seized shipments of orange juice that were not properly labeled.
a. True
b. False
48. In recent years, the FDA has allowed drugs that show some promise for life-threatening diseases such as AIDS to
be used more quickly than normally.
a. True
b. False
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49. The FTC was created by Congress to help enforce antitrust laws and deal with deceptive business practices.
a. True
b. False
50. The FTC investigates a wide range of practices suspected to be unfair and deceptive.
a. True
b. False
51. Many FTC complaints are settled by consent decree rather than a trial.
a. True
b. False
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52. The FTC deception policy states that any deceptive practice likely to mislead any consumer will be challenged by
Congress.
a. True
b. False
53. The FTC deception policy is applied equally to all products regardless of the sex, age, race or financial condition of
the consumers in the relevant market.
a. True
b. False
54. The FTC deception policy is the same, in effect, as common law fraud.
a. True
b. False
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55. The FTC deception policy holds that failure to reveal certain information may be found to be deceptive.
a. True
b. False
56. Maximum judgment in an FTC deception cases is $1 million.
a. True
b. False
57. The FTC is required by law to sue all advertisers that publish deceptive ads.
a. True
b. False
58. The FTC may not bring an action against a company for an unfair act; the act must be unfair and deceptive.
a. True
b. False
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59. The FTC may sue a company for an unfair act that is not deceptive.
a. True
b. False
60. The FTC may not regulate products sold by telemarketing; those are controlled by the Federal Communications
Commission.
a. True
b. False
61. The FTC may prosecute companies that solicit investments for things such as phony oil and gas wells.
a. True
b. False
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62. The FTC may not prosecute companies that sell investment scams; that responsibility falls with the Securities and
Exchange Commission.
a. True
b. False
63. In Federal Trade Commission v. John Beck Amazing Profits, where Beck was sued by the FTC for
deception in the sale of his "wealth creation" products, the court held that Beck's operation provided material
information that was misleading so would be stopped.
a. True
b. False
64. In Federal Trade Commission v. John Beck Amazing Profits, where Beck was sued by the FTC for
deception in the sale of his "wealth creation" products, the court held that Beck's infomercials were a form of
speech protected by the First Amendment.
a. True
b. False

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