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Chapter 4
Business and the Constitution
TRUE/FALSE QUESTIONS
B1. In a federal form of government, the national government does not share
sovereign power with the states.
B2. The states can establish laws and regulations that would interfere with trade
and commerce among the states.
B3. The full faith and credit clause prevents a state from imposing unreasonable
burdens on citizens of another, particularly with regard to means of doing
business.
B4. The checks and balances in the U.S. Constitution prevent any one branch of
government from exercising too much power.
2 TEST BANK B—UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS
B5. Under the U.S. Constitution, the judicial branch interprets the laws.
B6. The term police powers encompasses just the enforcement of criminal laws.
B7. The breadth of the commerce clause permits the government to legislate only
in areas in which Congress has explicitly been granted power.
B8. Under the supremacy clause, a valid federal statute or regulation will take
precedence over a conflicting state or local law or regulation on the same
general subject.
B9. Congress may tax some states and exempt others.
B10. The Bill of Rights protects individuals, but not business entities, against various
types of interference by the government.
B11. Traditionally, the courts have protected the right to free speech to the fullest
extent possible.
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B12. Expression—oral, written, or symbolized by conduct—is not subject to
restrictions.
B13. According to the United States Supreme Court, the First Amendment prevents
limits from being placed on independent political expenditures by corporations.
B14. The First Amendment does not require a complete separation of church and
state.
B15. To obtain a search warrant, law enforcement officers must convince a judge
that they have reasonable grounds to believe a search will reveal evidence of a
specific illegality.
B16. Generally, government inspectors do not have the right to enter business
premises without a warrant.
B17. Substantive due process limits what the government can do in its legislative
and executive capacities.
B18. A law that prohibits or inhibits only some persons from exercising a
fundamental right will be subject to “strict scrutiny” by the courts.
4 TEST BANK B—UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS
B19. Pretexting is the process of obtaining information by false means.
B20. State laws protect individuals’ privacy rights, often to a significant degree.
MULTIPLE-CHOICE QUESTIONS
B1. The Constitution sets forth specific powers that can be exercised by the
national government and provides that the national government has the implied
power to undertake actions necessary to carry its expressly designated
powers. Under the Tenth Amendment, all other powers are expressly reserved
to
a. none of the choices.
b. the states.
c. the national government.
d. the people.
B2. Savers Mart, Inc., distributes its merchandise on an interstate basis. Under the
commerce clause, Congress has the power to regulate
a. any commercial activity in the United States.
b. only activities that are in intrastate commerce.
c. only activities that are in local commerce.
d. none of the choices.
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B3. A statute enacted by the Arizona state legislature to regulate trucking affects
interstate commerce. In evaluating this statute, the courts will balance the
burden that it imposes on interstate commerce against
a. the courts’ authority to determine that a law is unconstitutional.
b. the purpose of interstate commerce.
c. the state’s interest in regulating the matter.
d. the statute’s impact on noneconomic activity.
B4. Selena’s Fajitas, a fast food outfit, files a suit against the state of Texas,
claiming that a Texas state law violates the commerce clause. The court will
agree if the statute imposes a substantial burden on
a. a local government.
b. interstate commerce.
c. noneconomic activity.
d. the state.
B5. Congress enacts a law prohibiting toys made in Indonesia from being sold in
the United States. The Washington state legislature enacts a law allowing the
sale of Indonesian-made toys. Washington’s law will most likely be
a. rendered invalid under the supremacy clause.
b. held to be valid under the equal protection clause.
c. struck down under the taxing and spending clause.
d. upheld under the commerce clause.
6 TEST BANK B—UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS
B6. A decision by the federal Environmental Protection Agency (EPA) on the
amount of carbon that can be emitted from a car’s exhaust system conflicts
with a California state law. In this situation, under the supremacy clause,
a. both the decision and the law are invalid.
b. both the decision and the law apply concurrently.
c. California’s law takes precedence.
d. the EPA’s decision takes precedence.
B7. Congress enacts the Supplemental Income Tax Act (SITA) to exempt the
citizens of New Jersey from federal taxes until their coastal towns are rebuilt
from the ravages of a recent hurricane. SITA will most likely be
a. rendered invalid under the supremacy clause.
b. held to be valid under the equal protection clause.
c. struck down under the taxing and spending clause.
d. upheld under the commerce clause.
B8. The Long-haul Truckers Association wants the federal government to spend
funds to build a new highway. Congress can spend revenues
a. only to carry out its enumerated powers.
b. to promote any objective that it deems worthwhile.
c. as long as the funds are spent uniformly among the states.
d. without regard to whether the expense violates the Constitution.
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B9. Rodrick, the chief executive officer of Social Post Host Inc., claims that certain
actions by the state of Texas infringe on rights guaranteed by the Bill of Rights.
Most of these guarantees have been held to limit
a. federal actions only.
b. federal and state actions.
c. federal and state actions, and actions by nongovernment entities.
d. actions by nongovernment entities only.
B10. Mariah creates a t-shirt design that expresses support for Nathan, a
presidential candidate, and distributes t-shirts imprinted with the design to her
friends. The t-shirts are an example of
a. unprotected speech.
b. controlled speech.
c. symbolic speech.
d. illegal speech.
B11. Port Harbor City enacts an ordinance that bans the distribution of all printed
materials on city streets. Later, after the city enacts a new “revenue–enhancing”
measure, Quint distributes handbills protesting that measure. When Quint is
charged with violating the printed-materials ban, he files a suit against the city
arguing that the city lacked a compelling interest in banning handbills. Most
likely, the court will hold that the ban is
a. an unconstitutional restriction of speech.
b. constitutional under the First Amendment.
c. justified by the need to protect individual rights.
d. necessary to protect national interests.
8 TEST BANK B—UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS
B12. Sustainable Products Corporation regularly expresses opinions on political
issues. Under the First Amendment, corporate political speech is given
a. discouraged.
b. forbidden.
c. protected.
d. required.
B13. Taco Hot Dogs, Inc., regularly advertises its products. Under the First
Amendment, in comparison with noncommercial speech, the protection given
these ads is
a. equally extensive.
b. less extensive.
c. more extensive.
d. non-existent.
B14. Congress enacts the Ad Restriction Act (ARA) to limit advertising in certain
circumstances. The ARA will be considered valid if it directly advances a
substantial government interest
a. and goes no further than necessary to achieve its purpose.
b. without regard to how “far” it goes.
c. and the parties affected by it can elect how “far” to go in applying it.
d. and goes further than necessary to ensure full coverage.
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B15. Utah enacts a law that restricts certain kinds of advertising to protect
consumers from being misled. This law would likely be held by a court to be
a. an unconstitutional restriction of speech.
b. constitutional under the First Amendment.
c. unnecessary to protect individual rights.
d. necessary to protect state interests.
B16. Keralyn creates a Web site to post threatening messages about celebrities.
The First Amendment protects such speech
a. all of the time.
b. none of the time.
c. only if it is noncommercial.
d. only if it is symbolic.
B17. Oklahoma enacts a law requiring all businesses in the state to donate 10 per-
cent of their profits to Protestant churches that provide certain services to
persons whose income is below the poverty level. Price-Lo Mart files a suit to
block the law’s enforcement. The court would likely hold that this law violates
a. no clause in the U.S. Constitution.
b. the establishment clause.
c. the free exercise clause.
d. the supremacy clause.
10 TEST BANK B—UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS
B18. Coffee Klatch Party Group, a political organization, files a claim to challenge a
Delaware statute that limits the liberty of all persons to broadcast “annoying”
radio commercials. This claim is most likely based on the right to
a. equal protection of the law.
b. privacy.
c. procedural due process.
d. substantive due process.
B19. In an effort to reduce traffic, Bay City enacts an ordinance that allows only a
few specific street vendors to operate in certain areas. A court would likely
review this ordinance under the principles of
a. the commerce clause.
b. the equal protection clause.
c. the due process clause.
d. the First Amendment.
B20. Jon, a law enforcement official, monitors Kelsey’s Internet activities—e-mail
and Web site visits—to gain access to her personal financial data and student
information. This may violate Kelsey’s right to
a. equal protection of the law.
b. privacy.
c. procedural due process.
d. substantive due process.
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ESSAY QUESTIONS
B1. The Wisconsin state legislature enacts a statute that prohibits the advertising of
video games “because the games might be harmful to minors.” Despite this
new statute, the president of xGamez, Inc., orders xGamez marketers to place
ads in various media. When an xGamez ad appears on YUTV, a local
television station, xGamez and YUTV are charged with violating the statute.
What is the defendants’ best defense against a conviction?
B2. The Pennsylvania Consumer Protection Agency (PCPA) investigates the
marketing practices of Respond Now!, Inc. The PCPA serves a subpoena on
Respond Now!, ordering the firm to provide certain business records, including
its marketing agreements with other companies. Respond Now! refuses to
comply with the subpoena. On what is the company most likely basing its
refusal? Is a court likely to support this position? Why or why not?
12 TEST BANK B—UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS
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