Chapter 4
Constitutional Authority to
Regulate Business
N.B.: TYPE indicates that a question is new, modified, or unchanged, as follows.
N A question new to this edition of the Test Bank.
+ A question modified from the previous edition of the Test Bank.
= A question included in the previous edition of the Test Bank.
TRUE/FALSE QUESTIONS
B1. All powers not specifically delegated to the federal government are reserved to the
states.
B2. Under their police powers, states can regulate private activities to protect or promote
the public order, health, safety, morals, and general welfare.
B3. The full faith and credit clause ensures that rights established under a contract in one
state are honored by other states.
B4. A state law that treats nonresidents different from residents may violate the privileges
and immunities clause.
B5. Under the U.S. Constitution, each branch of government limits some actions of the
other branches.
B6. The states can regulate any activity that substantially affects interstate commerce.
B7. Under the commerce clause, a state may impose a higher tax on out–of-state products
shipped to in-state locations.
B8. Preemption is a doctrine under which a state law takes precedence over a conflicting
federal law.
B9. Congress may tax some states and exempt others.
B10. The Bill of Rights protects individuals against various types of interference by the
government.
B11. The courts determine when the laws restricting free speech are justified by the need
to protect other rights.
B12. A restriction on commercial speech is valid as long as it forbids only the expression of
views on controversial issues.
B13. The First Amendment protects obscene speech.
B14. The First Amendment requires a complete separation of church and state.
B15. A search warrant must particularly describe whatever is to be searched.
B16. Generally, government inspectors have the right to enter business premises without a
warrant.
B17. Substantive due process limits what the government can do in its legislative capacity.
B18. A law that limits only some persons’ exercise of a fundamental right is valid under any
circumstances.
B19. Pretexting is the process of obtaining information by false means.
B20. State laws often significantly protect individuals’ privacy rights.
MULTIPLE CHOICE QUESTIONS
B1. Under the Constitution
a. neither the national government nor the states have sovereign power.
b. the national government and the states share sovereign power.
c. the national government has all sovereign power.
d. the states have all sovereign power.
B2. Household Furnishings, 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. only activities that are not in commerce.
B3. The state legislature of Kansas enacts a statute to regulate trucking that affects
interstate commerce. This statute will be balanced in part in terms of
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. Charlie, the owner of Charlie’s Foreign Auto Repair Service, files a suit against the
state of Delaware, claiming that a state law violates the commerce clause. The court
will agree if the statute
a. affects citizens’ private activities.
b. imposes a substantial burden on interstate commerce.
c. imposes a substantial burden on the state.
d. promotes the public order, health, safety, morals, or general welfare.
B5. Congress enacts a law prohibiting toys made in China from being sold in the United
States. The Hawaii state legislature enacts a law allowing the sale of Chinese-made
toys. Hawaii’s law will most likely be
a. rendered invalid under the supremacy clause.
b. rendered valid the equal protection clause.
c. struck down under the taxing and spending clause.
d. upheld under the commerce clause.
B6. A decision by the 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
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
Louisiana from their federal taxes until New Orleans is rebuilt from the ravages of
Hurricane Katrina. SITA will most likely be
a. rendered invalid under the supremacy clause.
b. rendered valid the equal protection clause.
c. struck down under the taxing and spending clause.
d. upheld under the commerce clause.
B8. Mercy, the chief executive officer of Medico Hospital Corporation, claims that certain
actions by the state of New York infringe on rights guaranteed by the Bill of Rights.
Most of these rights are held to limit
a. federal governmental actions only.
b. federal and state governmental actions.
c. state governmental actions only.
d. actions by non-governmental entities only.
B9. The Tourist Travelers Association wants the federal government to spend money 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.
B10. Colorado enacts a statute that bans the distribution of anonymous political leaflets. A
court would likely hold this to be
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 state interests.
B11. Energy Corporation regularly expresses opinions on political issues. Under the First
Amendment, corporate political speech is given
a. little protection.
b. no protection.
c. significant protection.
d. total protection.
B12. Direct Mail Sales, Inc., regularly advertises its products. Under the First Amendment,
in comparison to noncommercial speech, these ads are given
a. equal protection.
b. less protection.
c. more protection.
d. no protection.
B13. Congress enacts the Advertising Restriction Act (ARA. The ARA will be considered valid
if it directly advances a substantial government interest and
a. goes no further than necessary.
b. without regard to how “far” it goes.
c. parties affected by it can elect how “far” to apply it.
d. goes further than necessary to ensure full coverage.
B14. Iowa 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. justified by the need to protect individual rights.
d. necessary to protect state interests.
B15. Adult Shoppe in Beach City sells a variety of publications, including child pornography.
Beach City enacts an ordinance prohibiting the sale of such materials. This ordinance
is most likely
a. an invalid restriction of individuals’ privacy.
b. an unconstitutional restriction of speech.
c. a violation of adults’ rights to enjoy certain privileges and immunities.
d. constitutional under the First Amendment.
B16. Brad stands in front of Rustler’s Round–Up Café, shouting “fighting words” that are
likely to incite Rustler’s patrons to respond violently. 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. Kansas enacts a law requiring all businesses in the state to donate 10 percent of their
profits to Protestant churches that provide certain services to persons whose income
is below the poverty level. Lo-Price Stores 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.
B18. Ralph, an investigator for the Securities and Exchange Commission, goes to the offices
of Trust & Worthy Accountants to inspect Trust & Worthy’s clients’ business records.
Government inspectors generally have a right to enter business premises
a. only with a warrant.
b. without a warrant.
c. once the issuance of a warrant has been sought.
d. under no circumstances.
B19. Justice For All, a political organization, files a claim to challenge a Colorado 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.
B20. Harbor Town enacts an ordinance to allow only a few street vendors to operate in
certain areas, for the purpose of reducing traffic. 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.
ESSAY QUESTIONS
B1. A 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 Games Marketing, Inc. (GMI), orders GMI marketers to place ads in any
media. When a GMI ad appears on HDTV, a local television station, GMI and HDTV are
charged with violating the statute. What is the defendants’ best defense against a
conviction?
B2. The Alabama Consumer Protection Agency (ACPA) investigates the marketing
practices of Beta Sales, Inc. The ACPA serves a subpoena on Beta, ordering the firm to
provide certain business records, including its marketing agreements with other
companies. Beta refuses to comply with the subpoena. On what is Beta most likely
basing its refusal? Is a court likely to support Beta’s position? Why or why not?