, Chapter 01 Ethics and Business
True / False Questions
1. Ethical decision making in business is limited to major corporate decisions with dramatic social consequences.
True False
2. In business, every decision can be covered by economic, legal, or company rules and regulations.
True False
3. Due to the high incidence of corporate frauds today, the direct costs of unethical business practice are less visible now than they
have ever been before.
True False
4. In a general sense, a business stakeholder is one who has made substantial financial investments in the business.
True False
5. A firm's ethical reputation can provide a competitive advantage in the marketplace with customers, suppliers, and employees.
True False
1-1
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written
consent of McGraw-Hill Education.
,6. The Grayson-Himes Pay for Performance Act was passed to amend the executive compensation provisions of the Emergency
Economic Stabilization Act of 2008.
True False
7. Ethics refers to how human beings should properly live their lives.
True False
8. Ethical business leadership is the skill to create a work environment that helps employees guiltlessly embrace their own good and
bad facets.
True False
9. Norms appeal to certain values that would be promoted or attained by acting in a certain way.
True False
10. Values are the only guidance individuals need to act in ways that are positive or ethical.
True False
11. Ethical values are personal codes of ethics that ensure that a person meets his or her individual standards of well-being.
True False
12. The well-being promoted by ethical values is not a personal and selfish well-being.
True False
13. Societies that value individual freedom legally stipulate codes of personal integrity and common decency to safeguard this
freedom.
True False
14. In civil law, there is no room for ambiguity in applying the law because much of the law is established by past precedent.
True False
15. Ethical theories are patterns of thinking, or methodologies, to help us decide what to do.
True False
Multiple Choice Questions
16. Identify a true statement about ethical decision making in business.
A. Ethical decision making is not limited to major corporate decisions with dramatic social consequences.
B. Ethical decisions that employees make have to always be based upon clearly established guidelines laid down by the board of
directors.
C. All ethical decisions can be covered by economic, legal, or company rules and regulations.
D. Every instance of ethical decision making should be based on the law of the land.
1-2
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written
consent of McGraw-Hill Education.
, 17. Identify a true statement about ethical decision making in business.
A. Employees only have to deal with situations that call for ethical decision making once they reach managerial positions within
organizations.
B. At some point, every worker will be faced with an issue that will require ethical decision making.
C. Companies are legally obligated to cover all ethical decisions by internal rules and regulations.
D. Ethical decision making should not rely on the personal values and principles of the individuals involved.
18. Which of the following statements is true about ethical decision making in business?
A. Ethical decision making is limited to the type of major corporate decisions with social consequences.
B. Every employee does not face an issue that requires ethical decision making.
C. All ethical decisions can be covered by economic, legal, or company rules and regulations.
D. Ethical decision making should rely on the personal values and principles of the individuals involved.
19. In a general sense, anyone who affects or is affected by decisions made within a firm can be called a business _____.
A. nominee
B. stakeholder
C. analyst
D. insider
20. Which of the following best describes a business stakeholder?
A. Only the minority shareholders in a business entity
B. Only those who have acquired significant shares in a firm
C. Anyone who audits a firm
D. Anyone who affects or is affected by decisions made within a firm
21. Identify the bill that was passed in April 2009 to amend the executive compensation provisions of the Emergency Economic
Stabilization Act of 2008 to prohibit unreasonable and excessive compensation and compensation not based on performance
standards.
A. The Gramm-Rudman-Hollings Performance and Results Act
B. The Employee Pay Comparability Act
C. The Grayson-Himes Pay for Performance Act
D. The Statutory Pay-As-You-Go Act
22. Which of the following is a power granted to the Treasury secretary of the United States under the Grayson-Himes Pay for
Performance Act?
A. Specifying which employees are eligible to be paid bonuses
B. Reviewing how companies give their bonuses
C. Reviewing the constitution of the boards of directors of companies
D. Specifying what criteria must be considered when elevating people to upper-management positions
23. Which of the following best describes ethics?
A. An academic discipline that originated in the early 1900s
B. A descriptive approach that provides an account of how and why people do act the way they do
C. The study of how human beings should properly live their lives
D. A descriptive approach such as psychology and sociology
1-3
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written
consent of McGraw-Hill Education.
True / False Questions
1. Ethical decision making in business is limited to major corporate decisions with dramatic social consequences.
True False
2. In business, every decision can be covered by economic, legal, or company rules and regulations.
True False
3. Due to the high incidence of corporate frauds today, the direct costs of unethical business practice are less visible now than they
have ever been before.
True False
4. In a general sense, a business stakeholder is one who has made substantial financial investments in the business.
True False
5. A firm's ethical reputation can provide a competitive advantage in the marketplace with customers, suppliers, and employees.
True False
1-1
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written
consent of McGraw-Hill Education.
,6. The Grayson-Himes Pay for Performance Act was passed to amend the executive compensation provisions of the Emergency
Economic Stabilization Act of 2008.
True False
7. Ethics refers to how human beings should properly live their lives.
True False
8. Ethical business leadership is the skill to create a work environment that helps employees guiltlessly embrace their own good and
bad facets.
True False
9. Norms appeal to certain values that would be promoted or attained by acting in a certain way.
True False
10. Values are the only guidance individuals need to act in ways that are positive or ethical.
True False
11. Ethical values are personal codes of ethics that ensure that a person meets his or her individual standards of well-being.
True False
12. The well-being promoted by ethical values is not a personal and selfish well-being.
True False
13. Societies that value individual freedom legally stipulate codes of personal integrity and common decency to safeguard this
freedom.
True False
14. In civil law, there is no room for ambiguity in applying the law because much of the law is established by past precedent.
True False
15. Ethical theories are patterns of thinking, or methodologies, to help us decide what to do.
True False
Multiple Choice Questions
16. Identify a true statement about ethical decision making in business.
A. Ethical decision making is not limited to major corporate decisions with dramatic social consequences.
B. Ethical decisions that employees make have to always be based upon clearly established guidelines laid down by the board of
directors.
C. All ethical decisions can be covered by economic, legal, or company rules and regulations.
D. Every instance of ethical decision making should be based on the law of the land.
1-2
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written
consent of McGraw-Hill Education.
, 17. Identify a true statement about ethical decision making in business.
A. Employees only have to deal with situations that call for ethical decision making once they reach managerial positions within
organizations.
B. At some point, every worker will be faced with an issue that will require ethical decision making.
C. Companies are legally obligated to cover all ethical decisions by internal rules and regulations.
D. Ethical decision making should not rely on the personal values and principles of the individuals involved.
18. Which of the following statements is true about ethical decision making in business?
A. Ethical decision making is limited to the type of major corporate decisions with social consequences.
B. Every employee does not face an issue that requires ethical decision making.
C. All ethical decisions can be covered by economic, legal, or company rules and regulations.
D. Ethical decision making should rely on the personal values and principles of the individuals involved.
19. In a general sense, anyone who affects or is affected by decisions made within a firm can be called a business _____.
A. nominee
B. stakeholder
C. analyst
D. insider
20. Which of the following best describes a business stakeholder?
A. Only the minority shareholders in a business entity
B. Only those who have acquired significant shares in a firm
C. Anyone who audits a firm
D. Anyone who affects or is affected by decisions made within a firm
21. Identify the bill that was passed in April 2009 to amend the executive compensation provisions of the Emergency Economic
Stabilization Act of 2008 to prohibit unreasonable and excessive compensation and compensation not based on performance
standards.
A. The Gramm-Rudman-Hollings Performance and Results Act
B. The Employee Pay Comparability Act
C. The Grayson-Himes Pay for Performance Act
D. The Statutory Pay-As-You-Go Act
22. Which of the following is a power granted to the Treasury secretary of the United States under the Grayson-Himes Pay for
Performance Act?
A. Specifying which employees are eligible to be paid bonuses
B. Reviewing how companies give their bonuses
C. Reviewing the constitution of the boards of directors of companies
D. Specifying what criteria must be considered when elevating people to upper-management positions
23. Which of the following best describes ethics?
A. An academic discipline that originated in the early 1900s
B. A descriptive approach that provides an account of how and why people do act the way they do
C. The study of how human beings should properly live their lives
D. A descriptive approach such as psychology and sociology
1-3
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written
consent of McGraw-Hill Education.
