The Legal Environment of Business Text and Cases 9th Edition by Cross Test Bank

The Legal Environment of Business Text and Cases 9th Edition by Cross Test Bank

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WITH ANSWERS

The Legal Environment of Business Text and Cases 9th Edition by Cross Test Bank

Chapter 5

 

 

Business and the Constitution

 

 

 

N.B.:  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

 

1. In a federal form of government, the national government does not share sovereign power with the states.

 

answer:     F                               PAGES:   Section 1                type:       N

BUSPROG: Analytic                                AICPA:  BB-Legal

 

2. 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.

 

answer:     F                               PAGES:   Section 1                TYPE:       N

BUSPROG: Analytic                                AICPA:  BB-Legal

 

3. The checks and balances in the U.S. Constitution prevent any one branch of government from exercising too much power.

 

ANSWER:     T                               PAGES:   Section 1                TYPE:       N

BUSPROG: Reflective                             AICPA:  BB-Critical Thinking

 

 

 

4. The term police powers encompasses just the enforcement of criminal laws.

 

answer:     F                               PAGES:   Section 1                TYPE:       N

BUSPROG: Analytic                                AICPA:  BB-Legal

 

5. Under the U.S. Constitution, the judicial branch interprets the laws.

 

ANSWER:     T                               PAGES:   Section 1                TYPE:       +

BUSPROG: Analytic                                AICPA:  BB-Legal

 

6. The states can establish laws and regulations that would interfere with trade and commerce among themselves.

 

answer:     F                               PAGES:   Section 1                TYPE:       N

BUSPROG: Analytic                                AICPA:  BB-Critical Thinking

 

7. The breadth of the commerce clause permits the government to legislate only in areas in which Congress has explicitly been granted power.

 

ANSWER:     F                               PAGES:   Section 1                type:       N

BUSPROG: Reflective                             AICPA:  BB-Critical Thinking

 

8. 8. 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.

 

answer:     T                               PAGES:   Section 1                type:       N

BUSPROG: Analytic                                AICPA:  BB-Critical Thinking

 

9. Congress may tax some states and exempt others.

 

answer:     F                               PAGES:   Section 1                type:       =

BUSPROG: Analytic                                AICPA:  BB-Critical Thinking

 

10. The Bill of Rights protects individuals, but not business entities, against various types of interference by the government.

 

answer:     F                               PAGES:   Section 2                type:       +

BUSPROG: Analytic                                AICPA:  BB-Legal

 

11. Traditionally, the courts have protected the right to free speech to the fullest extent possible.

 

ANSWER:     T                               PAGES:   Section 2                type:       N

BUSPROG: Analytic                                AICPA:  BB-Legal

 

12. Expressionoral, written, or symbolized by conductis not subject to restrictions.

 

ANSWER:     F                               PAGES:   Section 2                TYPE:       N

BUSPROG: Analytic                                AICPA:  BB-Legal

 

13. According to the United States Supreme Court, the First Amendment prevents limits from being placed on independent political expenditures by corporations.

 

answer:     T                               PAGES:   Section 2                type:       N

BUSPROG: Reflective                             AICPA:  BB-Critical Thinking

 

14. The First Amendment does not require a complete separation of church and state.

 

answer:     T                               PAGES:   Section 2                type:       +

BUSPROG: Reflective                             AICPA:  BB-Critical Thinking

 

15. 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.

 

ANSWER:     T                               PAGES:   Section 2                TYPE:       N

BUSPROG: Analytic                                AICPA:  BB-Critical Thinking

 

16. Generally, government inspectors do not have the right to enter business premises without a warrant.

 

ANSWER:     T                               PAGES:   Section 2                TYPE:       +

BUSPROG: Analytic                                AICPA:  BB-Legal

 

 

 

17. Substantive due process limits what the government can do in its legislative and executive capacities.

 

ANSWER:     T                               PAGES:   Section 3                TYPE:       +

BUSPROG: Analytic                                AICPA:  BB-Legal

 

18. A law that prohibits or inhibits only some persons from exercising a fundamental right will be subject to strict scrutiny by the courts.

 

ANSWER:     T                               PAGES:   Section 3                TYPE:       N

BUSPROG: Analytic                                AICPA:  BB-Legal

 

19. Pretexting is the process of obtaining information by false means.

 

ANSWER:     T                               PAGES:   Section 4                TYPE:       =

BUSPROG: Analytic                                AICPA:  BB-Legal

 

20. State laws protect individuals privacy rights, often to a significant degree.

 

answer:     T                               PAGES:   Section 4                type:       +

BUSPROG: Reflective                             AICPA:  BB-Critical Thinking

 

 

MULTIPLE-CHOICE QUESTIONS

 

1. 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

 

1. none of the choices.
2. the states.
3. the national government.
4. the people.

 

answer:     B                              PAGES:   Section 1                type:       N

BUSPROG: Analytic                                AICPA:  BB-Legal

 

 

 

2. Savers Mart, Inc., distributes its merchandise on an interstate basis. Under the commerce clause, Congress has the power to regulate

 

1. any commercial activity in the United States.
2. only activities that are in intrastate commerce.
3. only activities that are in local commerce.
4. none of the choices.

 

answer:     A                              PAGES:   Section 1                type:       +

BUSPROG: Analytic                                AICPA:  BB-Legal

 

3. 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

 

1. the courts authority to determine that a law is unconstitutional.
2. the purpose of interstate commerce.
3. the states interest in regulating the matter.
4. the statutes impact on noneconomic activity.

 

ANSWER:     C                              PAGES:   Section 1                TYPE:       +

BUSPROG: Reflective                             AICPA:  BB-Legal

 

4. Selenas 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

 

1. a local government.
2. interstate commerce.
3. noneconomic activity.
4. the state.

 

answer:     B                              PAGES:   Section 1                type:       N

BUSPROG: Reflective                             AICPA:  BB-Decision Modeling

 

 

 

5. 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. Washingtons law will most likely be

 

1. rendered invalid under the supremacy clause.
2. held to be valid under the equal protection clause.
3. struck down under the taxing and spending clause.
4. upheld under the commerce clause.

 

answer:     A                              PAGES:   Section 1                TYPE:       =

BUSPROG: Reflective                             AICPA:  BB-Legal

 

6. A decision by the federal Environmental Protection Agency (EPA) on the amount of carbon that can be emitted from a cars exhaust system conflicts with a California state law. In this situation, under the supremacy clause,

 

1. both the decision and the law are invalid.
2. both the decision and the law apply concurrently.
3. Californias law takes precedence.
4. the EPAs decision takes precedence.

 

answer:     D                              PAGES:   Section 1                TYPE:       +

BUSPROG: Reflective                             AICPA:  BB-Legal

 

7. 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

 

1. rendered invalid under the supremacy clause.
2. held to be valid under the equal protection clause.
3. struck down under the taxing and spending clause.
4. upheld under the commerce clause.

 

answer:     C                              PAGES:   Section 1                TYPE:       =

BUSPROG: Reflective                             AICPA:  BB-Legal

 

 

 

8. 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

 

1. federal actions only.
2. federal and state actions.
3. federal and state actions, and actions by nongovernment entities.
4. actions by nongovernment entities only.

 

ANSWER:     B                              PAGES:   Section 2                TYPE:       +

BUSPROG: Reflective                             AICPA:  BB-Legal

 

9. 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

 

1. unprotected speech.
2. controlled speech.
3. symbolic speech.
4. illegal speech.

 

answer:     C                              PAGES:   Section 2                type:       N

BUSPROG: Reflective                             AICPA:  BB-Critical Thinking

 

10. Port Harbor City enacts an ordinance that bans the distribution of all printed materials on city streets. Later, Quint protests a new revenue-enhancing measure also enacted by the city by distributing handbills. When Quint is charged with violating the printed-materials ban, he files a suit against the city. Most likely, the court will hold that the ban is

 

1. an unconstitutional restriction of speech.
2. constitutional under the First Amendment.
3. justified by the need to protect individual rights.
4. necessary to protect national interests.

 

ANSWER:     A                              PAGES:   Section 2                TYPE:       N

BUSPROG: Reflective                             AICPA:  BB-Critical Thinking

 

 

 

11. The Long-haul Truckers Association wants the federal government to spend funds to build a new highway. Congress can spend revenues

 

1. only to carry out its enumerated powers.
2. to promote any objective that it deems worthwhile.
3. as long as the funds are spent uniformly among the states.
4. without regard to whether the expense violates the Constitution.

 

answer:     B                              PAGES:   Section 2                type:       =

BUSPROG: Reflective                             AICPA:  BB-Legal

 

12. Sustainable Products Corporation regularly expresses opinions on political issues. Under the First Amendment, corporate political speech is given

 

1. discouraged.
2. forbidden.
3. protected.
4. required.

 

ANSWER:     C                              PAGES:   Section 2                TYPE:       N

BUSPROG: Reflective                             AICPA:  BB-Critical Thinking

 

13. Taco Hot Dogs, Inc., regularly advertises its products. Under the First Amendment, in comparison with noncommercial speech, the protection given these ads is

 

1. equally extensive.
2. less extensive.
3. more extensive.
4. non-existent.

 

ANSWER:     B                              PAGES:   Section 2                TYPE:       +

BUSPROG: Reflective                             AICPA:  BB-Critical Thinking

 

 

 

14. 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

 

1. and goes no further than necessary to achieve its purpose.
2. without regard to how far it goes.
3. and the parties affected by it can elect how far to go in applying it.
4. and goes further than necessary to ensure full coverage.

 

answer:     A                              PAGES:   Section 2                type:       +

BUSPROG: Reflective                             AICPA:  BB-Legal

 

15. 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

 

1. an unconstitutional restriction of speech.
2. constitutional under the First Amendment.
3. justified by the need to protect individual rights.
4. necessary to protect state interests.

 

ANSWER:     B                              PAGES:   Section 2                TYPE:       =

BUSPROG: Reflective                             AICPA:  BB-Decision Modeling

 

16. Oklahoma 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. Price-Lo Mart files a suit to block the laws enforcement. The court would likely hold that this law violates

 

1. no clause in the U.S. Constitution.
2. the establishment clause.
3. the free exercise clause.
4. the supremacy clause.

 

answer:     C                              PAGES:   Section 2                type:       =

BUSPROG: Reflective                             AICPA:  BB-Decision Modeling

 

 

 

17. Keralyn creates a Web site to post threatening messages about celebrities. The First Amendment protects such speech

 

1. all of the time.
2. none of the time.
3. only if it is noncommercial.
4. only if it is symbolic.

 

ANSWER:     B                              PAGES:   Section 2                TYPE:       N

BUSPROG: Reflective                             AICPA:  BB-Legal

 

18. 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

 

1. equal protection of the law.
2. privacy.
3. procedural due process.
4. substantive due process.

 

ANSWER:     D                              PAGES:   Section 3                TYPE:       =

BUSPROG: Reflective                             AICPA:  BB-Legal

 

19. 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

 

1. the commerce clause.
2. the equal protection clause.
3. the due process clause.
4. the First Amendment.

 

ANSWER:     B                              PAGES:   Section 3                TYPE:       =

BUSPROG: Reflective                             AICPA:  BB-Critical Thinking

 

 

 

20. Jon, a law enforcement official, monitors Kelseys Internet activitiese-mail and Web site visitsto gain access to her personal financial data and student information. This may violate Kelseys right to

 

1. equal protection of the law.
2. privacy.
3. procedural due process.
4. substantive due process.

 

answer:     B                              PAGES:   Section 4                TYPE:       N

BUSPROG: Analytic                                AICPA:  BB-Legal

 

 

Essay Questions

 

1. 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?

 

ANSWER:   xGamez and YUTV cannot be convicted because a state legislature cannot enact a statute that restricts commercial speech (in this problem, marketing video games) to this extent.

The First Amendment protects commercial speech. Commercial speech does not receive as much protection as noncommercial speech, however, so states can place some restraints on the former. For example, to protect consumers, a state may ban certain kinds of marketing practices, such as deceptive or misleading advertising. Generally, a restriction on commercial speech will be considered valid as long as it (1) seeks to implement a substantial government interest, (2) directly advances that interest, and (3) goes no further than necessary to accomplish the objective.

Here, the complete ban on ads for video games because the games might be harmful to minors is too restrictive: it goes too far in attempting to protect minors for an apparently unsubstantiated purpose.

 

PAGES:         Section 2                                                                  type:       =

BUSPROG: Reflective                             AICPA:  BB-Decision Modeling

 

2. 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?

 

ANSWER:   Respond Now! is most likely refusing to comply with the subpoena on the ground that it has a constitutional privilege against self-incrimination. A corporation cannot invoke the U.S. Constitutions privilege against self-incrimination as a basis for refusing to produce documents in response to a subpoena, however, which means that a court is most likely to rule against Respond Now! A corporation can be compelled to comply with such a subpoena, because a corporation is a legal entity and not a natural person. The Fifth Amendments guarantee extends only to natural persons. Also, an employee of the corporation in charge of the corporate records cannot rely on his or her personal privilege against selfincrimination as a basis for refusing to produce the records.

 

PAGES:         Section 2                                                                  type:       =

BUSPROG: Reflective                             AICPA:  BB-Decision Modeling

 

Chapter 15

 

 

Internet Law,

Social Media, and Privacy

 

 

 

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

 

1. In some states, an unsolicited e-mail must include a toll-free phone number that the recipient can use to ask the sender to send no more unsolicited e-mail.

 

ANSWER:     T                               PAGES:   Section 1                TYPE:       N

BUSPROG: Analytic                                AICPA: BB-Legal

 

2. Federal law permits the sending of unsolicited commercial e-mail and does not prohibit spamming activities.

 

ANSWER:     F                               PAGES:   Section 1                TYPE:       N

BUSPROG: Analytic                                AICPA: BB-Legal

 

3. Cybersquatting is illegal only if a domain name is identical to the trademark of another, not if the name is merely confusingly similar.

 

ANSWER:     F                               PAGES:   Section 1                TYPE:       N

BUSPROG: Analytic                                AICPA: BB-Legal

 

4. Cybersquatting occurs when key words are inserted into the hyper text markup language code to tell Internet browsers specific information about a Web page.

 

answer:     F                               PAGES:   Section 1                TYPE:       N

BUSPROG: Analytic                          AICPA: BB-Legal

 

5. Using anothers trademark in a meta tag is not permissible, even if the use is reasonably necessary.

 

answer:     F                               PAGES:   Section 1                TYPE:       N

BUSPROG: Analytic                                AICPA: BB-Legal

 

6. Trademark dilution occurs when a person registers a domain name that is the same as, or confusingly similar to, the trademark of another and then offers to sell the domain name back to the original owner.

 

ANSWER:     F                               PAGES:   Section 1                TYPE:       N

BUSPROG: Analytic                                AICPA: BB-Legal

 

7. When you download an application on your smartphone, you are typically entering into a license agreement.

 

ANSWER:     T                               PAGES:   Section 1                TYPE:       N

BUSPROG: Reflective                             AICPA: BB-Legal

 

8. Much of the material on the Internet, including software and database information, is not copyrighted.

 

answer:     F                               PAGES:   Section 2                TYPE:       N

BUSPROG: Analytic                                AICPA: BB-Legal

 

9. The law does not restrict the fair use of methods for the circumvention of encryption software or other technological antipiracy protection for educational and other noncommercial purposes.

 

answer:     T                               PAGES:   Section 2                TYPE:       N

BUSPROG: Analytic                                AICPA: BB-Legal

 

 

 

10. An Internet service provider (ISP) is not liable for copyright infringement by its customer unless the ISP is aware of the subscribers violation.

 

answer:     T                               PAGES:   Section 2                TYPE:       N

BUSPROG: Analytic                                AICPA: BB-Legal

 

11. No federal court has held that digitally sampling a copyrighted sound recording of any length constitutes copyright infringement.

 

ANSWER:     F                               PAGES:   Section 2                TYPE:       N

BUSPROG: Analytic                                AICPA: BB-Legal

 

12. Employees who use social media in a way that violates their employers stated policies cannot be disciplined or fired from their jobs.

 

answer:     f                               PAGES:   Section 3                TYPE:       N

BUSPROG: Analytic                                AICPA: BB-Legal

 

13. Federal wiretapping law covers electronic forms of communication.

 

answer:     t                               PAGES:   Section 3                TYPE:       N

BUSPROG: Analytic                                AICPA: BB-Legal

 

14. Federal law permits the intentional interception of any wire, oral, or electronic communication.

 

answer:     F                               PAGES:   Section 3                TYPE:       N

BUSPROG: Analytic                                AICPA: BB-Legal

 

15. Employers can monitor employees electronic communications made in the ordinary course of business, including employees personal communications.

 

ANSWER:     F                               PAGES:   Section 3                TYPE:       N

BUSPROG: Analytic                                AICPA: BB-Legal

 

16. Federal law permits the intentional accessing of stored electronic communication even if the accessing is unauthorized.

 

answer:     F                               PAGES:   Section 3                TYPE:       N

BUSPROG: Analytic                                AICPA: BB-Legal

 

17. Law enforcement uses social media to detect and prosecute criminals.

 

answer:     T                               PAGES:   Section 3                TYPE:       N

BUSPROG: Analytic                                AICPA: BB-Legal

 

18. Social media posts are routinely included in discovery in litigation.

 

answer:     T                               PAGES:   Section 3                TYPE:       N

BUSPROG: Analytic                                AICPA: BB-Critical Thinking

 

19. Online defamation is wrongfully hurting a persons reputation by communicating false statements about that person to others online.

 

answer:     T                               PAGES:   Section 4                TYPE:       N

BUSPROG: Analytic                                AICPA: BB-Legal

 

20. It is frequently the companies rather than courts or legislatures that are defining the privacy rights of their online users.

 

answer:     t                               PAGES:   Section 5                TYPE:       N

BUSPROG: Analytic                                AICPA: BB-Legal

 

 

multiple-choice questions

 

Fact Pattern 15-1 (Questions 13 apply)

Great Looks Clothing Corporation sends daily e-mail ads to its previous customers and those who have opted to receive the notices. Hot Trends Inc. sends e-mail ads to any e-mail address that Hot Trends can find on the Web or otherwise generate. Ilene sends e-mail notes to her friends, relatives, and co-workers, discussing personal issues and recommending products or services that she likes.

 

1. Refer to Fact Pattern 15-1. Federal law preempts state antispam laws

 

1. with no exceptions.
2. except for laws that require the use of spam by business entities.
3. except for statutes that ban the use of spam altogether.
4. except for provisions that prohibit false and deceptive e-mailing practices.

 

ANSWER:     D                              PAGES:   Section 1                TYPE:       N

BUSPROG: Reflective                             AICPA: BB-Legal

 

2. Refer to Fact Pattern 15-1. One of the sendersGreat Looks, Hot Trends, or Ileneis acting outside the bounds of federal law. Federal law prohibits the sending of

 

1. unsolicited commercial e-mail.
2. solicited commercial e-mail.
3. commercial e-mail to randomly generated addresses.
4. non-commercial e-mail that promotes a product or service to a friend, co-worker, or relative.

 

ANSWER:     C                              PAGES:   Section 1                TYPE:       N

BUSPROG: Reflective                             AICPA: BB-Legal

 

3. Refer to Fact Pattern 15-1. Great Looks and Hot Trends are subject to the laws of the states in which they are located and do business. Many states

 

1. prohibit false and deceptive e-mailing practices.
2. require the use of spam by business entities.
3. ban the use of spam altogether.
4. preempt the application of federal law to commercial e-mail.

 

ANSWER:     A                              PAGES:   Section 1                TYPE:       N

BUSPROG: Reflective                             AICPA: BB-Legal

 

4. ConnectWeb, Inc., an Internet service provider (ISP), supplies information to the Federal Trade Commission concerning possible unfair or deceptive conduct in foreign jurisdictions. For this disclosure, federal law gives ConnectWeb and other ISPs immunity from liability. This is

 

1. goodwill.
2. fair use.
3. a safe harbor.
4. a license.

 

answer:     C                              PAGES:   Section 1                TYPE:       N

BUSPROG: Reflective                             AICPA: BB-Legal

 

 

Fact Pattern 15-2 (Questions 57 apply)

CallTalk Corporation, a smartphone and phone-time seller, chooses to use and register calltalk as its second-level domain. Later, CallTalks less successful competitor, CellTalk Company, chooses to use and register caltalk (an intentional misspelling of calltalk) as its second-level domain. Still later, Call&Talk, Inc., uses the domain name callltalk (also a deliberate misspelling of calltalk) without CallTalks authorization, to sell pornographic phone conversations.

 

5. Refer to Fact Pattern 15-2. By using a similar domain name to CallTalks, CellTalk is most likely attempting to profit from its competitors

 

1. goodwill.
2. fair use.
3. license.
4. safe harbor.

 

answer:     A                              PAGES:   Section 1                TYPE:       N

BUSPROG: Reflective     &n

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