The Legal Environment of Business Text and Cases Ethical Regulatory Global, and Corporate Issues 8th Edition by Frank B. Cross – Test Bank

Complete Test Bank With Answers

 

 

Sample Questions Posted Below

 

Chapter 5

Constitutional Law

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

A1. A2. A3. The state governments retain all powers not specifically delegated to

the federal government.

ANSWER: T PAGE: 98 TYPE: =

NAT: AACSB Analytic AICPA Legal

Under their police powers, states can regulate only public activities,

such as political demonstrations.

ANSWER: F PAGE: 98 TYPE: =

NAT: AACSB Analytic AICPA Critical Thinking

National legislation governs nearly every major business activity, in-

cluding conduct that has nothing to do with commerce.

51

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly

accessible website, in whole or in part.52 TEST BANK A—UNIT TWO: THE PUBLIC & INTERNATIONAL ENVIRONMENT

ANSWER: F PAGE: 99 TYPE: N

NAT: AACSB Analytic AICPA Critical Thinking

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly

accessible website, in whole or in part.CHAPTER 5: CONSTITUTIONAL LAW 53

A4. A5. A6. A7. A8. A9. A10. A11. The checks and balances in the U.S. Constitution prevent any one

branch of government from exercising too much power.

ANSWER: T PAGE: 99 TYPE: =

NAT: AACSB Reflective AICPA Critical Thinking

Congress can regulate all commerce in the United States.

ANSWER: T PAGE: 100 TYPE: N

NAT: AACSB Analytic AICPA Critical Thinking

The Constitution expressly excludes state regulation of commerce.

ANSWER: F PAGE: 100 TYPE: =

NAT: AACSB Analytic AICPA Legal

When there is a direct conflict between a federal and a state law, the

state law is rendered invalid.

ANSWER: T PAGE: 102 TYPE: =

NAT: AACSB Analytic AICPA Legal

Whether the federal government has preempted a certain area is

always clear.

ANSWER: F PAGE: 102 TYPE: =

NAT: AACSB Analytic AICPA Critical Thinking

The taxing and spending clause of the U.S. Constitution has had a

greater impact on business than any other clause in the Constitution.

ANSWER: F PAGE: 103 TYPE: =

NAT: AACSB Analytic AICPA Legal

Some constitutional protections apply to business entities.

ANSWER: T PAGE: 103 TYPE: =

NAT: AACSB Reflective AICPA Critical Thinking

The First Amendment does not protect corporate political speech.

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly

accessible website, in whole or in part.54 TEST BANK A—UNIT TWO: THE PUBLIC & INTERNATIONAL ENVIRONMENT

ANSWER: F PAGE: 104 TYPE: +

NAT: AACSB Reflective AICPA Critical Thinking

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly

accessible website, in whole or in part.CHAPTER 5: CONSTITUTIONAL LAW 55

A12. The First Amendment does not protect commercial speech as

extensively as noncommercial speech.

ANSWER: T PAGE: 105 TYPE: =

NAT: AACSB Reflective AICPA Critical Thinking

A13. The establishment clause of the U.S. Constitution prohibits the

federal government from promoting a religion.

ANSWER: T PAGE: 108 TYPE: +

NAT: AACSB Analytic AICPA Legal

A14. A law that has any impact on religion is unconstitutional.

ANSWER: F PAGE: 108 TYPE: N

NAT: AACSB Reflective AICPA Critical Thinking

A15. The right to due process of law applies to corporations.

ANSWER: T PAGE: 111 TYPE: N

NAT: AACSB Analytic AICPA Legal

A16. A law that regulates economic matters violates the equal protection

clause.

ANSWER: F PAGE: 111 TYPE: N

NAT: AACSB Analytic AICPA Critical Thinking

A17. Procedural due process requires that any government decision to

take a person’s property must be made fairly.

ANSWER: T PAGE: 111 TYPE: N

NAT: AACSB Analytic AICPA Legal

A18. A law that discriminates based on gender must substantially relate to

an important government objective to be valid.

ANSWER: T PAGE: 112 TYPE: N

NAT: AACSB Analytic AICPA Legal

A19. There is a specific guarantee of a right to privacy in the Constitution.

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly

accessible website, in whole or in part.56 TEST BANK A—UNIT TWO: THE PUBLIC & INTERNATIONAL ENVIRONMENT

ANSWER: F PAGE: 112 TYPE: =

NAT: AACSB Reflective AICPA Critical Thinking

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly

accessible website, in whole or in part.CHAPTER 5: CONSTITUTIONAL LAW 57

A20. Law enforcement officials can track the e-mail communications of

one party to find out the identities of other parties.

ANSWER: T PAGE: 113 TYPE: N

NAT: AACSB Reflective AICPA Legal

MULTIPLE CHOICE QUESTIONS

A1. Enterprising Markets Coalition (EMC), a political lobbying group,

wants a certain policy enacted into law. If EMC’s policy conflicts with

the U.S. Constitution, a law embodying it can be imposed by

a. Congress.

b. a federal court.

c. a state legislature.

d. none of the choices.

ANSWER: D PAGE: 98 TYPE: +

NAT: AACSB Reflective AICPA Legal

A2. The state of New York regulates private activities to protect or

promote the public order, health, safety, and general welfare under

its

a. police powers.

b. taxing powers.

c. spending powers.

d. supremacy powers.

ANSWER: A PAGE: 98 TYPE: =

NAT: AACSB Reflective AICPA Legal

A3. The Financial Institutions Association would like a certain law

enacted, administered, interpreted, and enforced in the best interest

of its members, which include banks. Under the Constitution,

Congress

a. administers the laws.

b. enforces the laws.

c. interprets the laws.

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly

accessible website, in whole or in part.58 TEST BANK A—UNIT TWO: THE PUBLIC & INTERNATIONAL ENVIRONMENT

d. makes the laws.

ANSWER: D PAGE: 99 TYPE: N

NAT: AACSB Analytic AICPA Legal

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly

accessible website, in whole or in part.CHAPTER 5: CONSTITUTIONAL LAW 59

A4. Ulrich, a citizen of Virginia, wants to enforce in the state of

Washington certain rights that he has under a contract with Xtreme

SnoBoards Inc. A Washington state court is most likely to enforce

such rights under

A5. A6. a. c. d. no provision in the U.S. Constitution.

b. the commerce clause.

the full faith and credit clause.

the privileges and immunities clause.

ANSWER: C PAGE: 99 TYPE: =

NAT: AACSB Reflective AICPA Legal

The Constitution sets out the authority and the limits of the branches

of the government. The term checks and balances means that

a. Congress writes checks and the other branches balance the

b. c. budget.

each branch has some power to limit the actions of the others.

the courts balance their authority to the other branches’

checklists.

d. the president “checks” the courts, which “balance” the laws.

ANSWER: B PAGE: 99 TYPE: +

NAT: AACSB Analytic AICPA Legal

Tami’s Tasty Tacos, a mobile vendor, files a suit against the state of

Utah, claiming that a Utah 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.

ANSWER: B PAGE: 100 TYPE: N

NAT: AACSB Reflective AICPA Legal

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly

accessible website, in whole or in part.60 TEST BANK A—UNIT TWO: THE PUBLIC & INTERNATIONAL ENVIRONMENT

A7. Len, a citizen of Maryland, obtains a federal license to operate a

commercial fishing boat in Chesapeake Bay. The Maryland state

legislature enacts a law that bans all commercial fishing in the bay.

The state law most likely violates

a. no provision in the U.S. Constitution.

b. the commerce clause.

c. the due process clause.

d. the supremacy clause.

ANSWER: D PAGE: 102 TYPE: =

NAT: AACSB Reflective AICPA Critical Thinking

A8. Congress enacts a law that sets out a medical-device approval

process for the Food and Drug Administration to follow. The law

includes a preemption provision. A device that goes through the

process injures Joe, who files a claim under state law to recover. The

court will most likely rule that

a. b. c. d. Joe’s state law claim preempts the federal law.

the federal law and state law claim are concurrent.

the federal and state law claim cancel each other out.

the federal law preempts Joe’s state law claim.

ANSWER: D PAGE: 102 TYPE: N

NAT: AACSB Reflective AICPA Legal

A9. Mike, an advocate of a certain religion, publishes an article in New

Times magazine insisting that Congress base all federal law on his

religion’s principles. The First Amendment guarantees Mike’s

freedom of

a. religion only.

b. speech only.

c. the press only.

d. the press, speech, and religion.

ANSWER: D PAGE: 103 TYPE: =

NAT: AACSB Reflective AICPA Legal

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly

accessible website, in whole or in part.CHAPTER 5: CONSTITUTIONAL LAW 61

A10. The Motor Vehicle Insurance Association wants the federal

government to spend money to build a new highway. Congress can

spend revenues

a. b. c. only to carry out Congress’s enumerated powers.

to promote any objective that Congress deems worthwhile.

without regard to whether the expense violates the Bill of

Rights.

d. without regard to whether the expense violates the

Constitution.

ANSWER: B PAGE: 103 TYPE: =

NAT: AACSB Analytic AICPA Legal

A11. Beachside City enacts an ordinance that bans the distribution of all

printed materials on city streets. Carl opposes the city’s latest

“revenue-enhancing” measure and wants to protest by distributing

handbills. In his suit against the city, a court would likely hold the

printed-materials ban to be

a. b. c. d. constitutional under the First Amendment.

not subject to the U.S. Constitution.

unconstitutional under the commerce clause.

unconstitutional under the First Amendment.

ANSWER: D PAGE: 104 TYPE: =

NAT: AACSB Reflective AICPA Critical Thinking

A12. Reusable Energy Corporation regularly expresses opinions on

political issues. Under the First Amendment, corporate political

speech is

a. discouraged.

b. forbidden.

c. protected.

d. required.

ANSWER: C PAGE: 104 TYPE: N

NAT: AACSB Reflective AICPA Legal

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly

accessible website, in whole or in part.62 TEST BANK A—UNIT TWO: THE PUBLIC & INTERNATIONAL ENVIRONMENT

A13. Minnesota enacts a statute to ban advertising in “bad taste.” This

statute would likely be held by a court to be

a. b. c. d. an unconstitutional restriction of speech.

constitutional under the First Amendment.

justified by the need to protect individual rights.

necessary to protect state interests.

ANSWER: A PAGE: 105 TYPE: =

NAT: AACSB Reflective AICPA Decision Modeling

A14. Xtreme Publications, Inc., disseminates obscene materials. This is

a. b. d. a crime under numerous state and federal statutes.

a privilege under Article IV, Section 2.

c a right under the commerce clause.

a right under the First Amendment.

ANSWER: A PAGE: 106 TYPE: =

NAT: AACSB Analytic AICPA Legal

A15. The police obtain a search warrant and search Errol’s apartment.

After yelling obscenities at the officers, Errol confesses to a crime

and implicates his friends. The Constitution protects against

a. obscene speech.

b. implication of others.

c. unreasonable searches.

d. none of the choices.

ANSWER: C PAGE: 109 TYPE: +

NAT: AACSB Reflective AICPA Legal

A16. Wyoming enacts a statute that limits the liberty of all persons,

including corporations, to broadcast “annoying” radio commercials.

This may violate

a. equal protection.

b. procedural due process.

c. substantive due process.

d. the right to privacy.

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly

accessible website, in whole or in part.CHAPTER 5: CONSTITUTIONAL LAW 63

ANSWER: C PAGE: 111 TYPE: =

NAT: AACSB Reflective AICPA Legal

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly

accessible website, in whole or in part.64 TEST BANK A—UNIT TWO: THE PUBLIC & INTERNATIONAL ENVIRONMENT

A17. Parker owns and operates Rancho Mirage Corporation, a destination

resort in Arizona that features horseback riding and bunkhouse

accommodations. The Constitution provides that no person shall be

deprived of “life, liberty, or property without due process of law.”

Included as “legal persons” under this clause are

a. c. the bunkhouses and other “manmade creations.”

b. the corporation and Parker.

horses and other “beings in nature.”

d. none of the choices.

ANSWER: B PAGE: 111 TYPE: N

NAT: AACSB Reflective AICPA Legal

A18. Myra claims that a Nebraska state statute infringes on her

“procedural due process” rights. This claim focuses on

a. procedures used in making decisions to take life, liberty, or

b. c. d. property.

the content of the statute.

the similarity of the treatment of similarly situated individuals.

the steps to be taken to protect Mary’s privacy.

ANSWER: A PAGE: 111 TYPE: =

NAT: AACSB Reflective AICPA Legal

A19. A Massachusetts state statute imposes a prison term, without a trial,

on all street entertainers who operate in certain areas. A court would

likely review this statute under the principles of

a. equal protection.

b. free exercise.

c. procedural due process.

d. substantive due process.

ANSWER: C PAGE: 111 TYPE: N

NAT: AACSB Reflective AICPA Legal

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly

accessible website, in whole or in part.CHAPTER 5: CONSTITUTIONAL LAW 65

A20. 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.

ANSWER: B PAGE: 113 TYPE: N

NAT: AACSB Reflective AICPA Risk Analysis

ESSAY QUESTIONS

A1. Jen operates Jen’s Fruits & Vegetables, a small market stocked

entirely with produce grown on her adjacent farm. Under what

clause of the Constitution can the federal government regulate Jen’s

activities? What is Jen’s best argument against federal regulation of

her farm and business?

ANSWER: Under the commerce clause, according to earlier

decisions by the United States Supreme Court, Congress has the

power to regulate any activity—interstate or intrastate—that affects

interstate commerce. Thus, under that clause, it could be argued

that a farmer’s growing and selling of produce is subject to federal

regulation because these activities affect interstate commerce. The

farmer-vendor’s best argument against federal regulation of her

farm and business is that in her case, these activities and their

effects are purely local. Because of the economic character of these

activities, and hence an effect on interstate commerce, despite their

local character, it is unlikely that a court would accept this argu-

ment, however.

PAGES: 99–102 TYPE: =

NAT: AACSB Reflective AICPA Decision Modeling

A2. Old Oak Brewery, Inc., makes and sells alcoholic beverages with

labels that display a drawing of a squirrel making the gesture

generally known as “giving the finger.” Old Oak applies to the Ohio

State Liquor Authority (OSLA) for brand-label approval to sell the

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly

accessible website, in whole or in part.66 TEST BANK A—UNIT TWO: THE PUBLIC & INTERNATIONAL ENVIRONMENT

beer in Ohio. Without considering alternatives, OSLA denies approval

because “the label could appear in grocery stores, with obvious

exposure on the shelf to children of tender age.” Why would a court

hold that the denial of Old Oak’s application violates the First

Amendment?

ANSWER: A court would most likely reason that OSLA’s ban on the

use of the labels lacks a “reasonable fit” with the state’s interest in

shielding minors from vulgarity, and OSLA did not adequately

consider alternatives to the ban. The interest of OSLA, as a state

agency, in protecting children from vulgar advertising is

“substantial.” The question is whether banning Old Oak’s labels

“directly advances” that interest. A court might reason that barring

the label at issue in this problem cannot realistically be expected to

reduce children’s exposure to such displays to any significant

degree, considering such displays’ wide currency in society. Also, as

to whether the ban on the labels is more extensive than necessary

to serve such an interest, a court would likely point out that there

may be many, less intrusive alternatives. For example, OSLA might

restrict the locations where Old Oak’s products may be displayed in

stores.

PAGES: 105–106 TYPE: =

NAT: AACSB Reflective AICPA Decision Modeling

© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly

accessible website, in whole or in part.