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Chapter 02 - Business Ethics and Social Responsibility
Chapter 02
Business Ethics and Social Responsibility
True / False Questions
1. All business decisions cannot be judged as right or wrong, ethical or unethical.
FALSE
Whether made in science, politics, sports, or business, any organizational decision can be
judged as right or wrong, ethical or unethical.
AACSB: Ethics
Accessibility: Keyboard Navigation
Bloom's: Understand
Difficulty: 2 Medium
Learning Objective: 02-01 Define business ethics and social responsibility and examine their importance.
Topic: The Ethical Concerns that Affect Business
2. An ethical issue is an identifiable problem, situation, or opportunity that requires a person

or organization to choose from among several actions that may be evaluated as ethical or
unethical.
TRUE
An ethical issue is an identifiable problem, situation, or opportunity that requires a person to
choose from among several actions that may be evaluated as right or wrong, ethical or
unethical. In business, this choice usually involves weighing monetary gain against what a
person considers appropriate conduct.
AACSB: Ethics
Bloom's: Remember
Difficulty: 1 Easy
Learning Objective: 02-02 Detect some of the ethical issues that may arise in business.
2-1
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
3. Ethical decisions in an organization are influenced by individual moral standards.
TRUE
Ethical decisions in an organization are influenced by three key factors: individual moral standards, the influence
of managers and coworkers, and the opportunity to engage in misconduct
AACSB: Ethics
Bloom's: Remember
Difficulty: 1 Easy
Learning Objective: 02-03 Specify how businesses can promote ethical behavior.
4. The concept of social responsibility is universally accepted.
FALSE
Although the concept of social responsibility is receiving more and more attention, it is still
not universally accepted.
AACSB: Ethics
Bloom's: Understand
Difficulty: 1 Easy
Learning Objective: 02-04 Explain the four dimensions of social responsibility.
Topic: Corporate Social Responsibility
2-2
5. A major social responsibility for business is providing equal opportunities for all
employees.
TRUE
A major legal and social responsibility for business is providing equal opportunities for all
employees regardless of their sex, age, race, religion, or nationality.
AACSB: Ethics
Bloom's: Remember
Difficulty: 1 Easy
Learning Objective: 02-05 Debate an organization's social responsibilities to owners, employees, consumers, the environment, and the
community.
Topic: Corporate Social Responsibility
Multiple Choice Questions
6. The principles and standards that determine acceptable conduct in business organizations
are referred to as:
A. social responsibility.
B. business strategies.
C. business ethics.
D. business stances.
E. corporate citizenship.
Business ethics is defined as the principles and standards that determine acceptable conduct
in business organizations.
AACSB: Ethics
Bloom's: Remember
Difficulty: 1 Easy
2-3
7. Which of the following statements is true?

A. All actions deemed unethical by society are also illegal.
B. The concerns of what is legal and ethical do not change over time.
C. The terms social responsibility and ethics should be used interchangeably.
D. Companies can be both profitable and socially responsible.
E. Businesses whose sole objective is to earn profit may not consider their
social responsibility.
Many consumers and social advocates believe that businesses should not only make a profit
but also consider the social implications of their activities. Socially responsible businesses
win the trust and respect of their employees, customers, and society and, in the long run,
increase profits.
AACSB: Ethics
Bloom's: Understand
8. The term refers to a business's obligation to maximize its positive impact and
minimize its negative impact on society.
A. social citizenship
B. social strategy C.
social ethics
D. social responsibility
E. social rule
Social responsibility refers to a business's obligation to maximize its positive impact and
minimize its negative impact on society.
AACSB: Ethics
Bloom's: Remember
Difficulty: 1 Easy
2-4
9. Which of the following statements is true?

A. Business ethics relates to an individual's values, principles, and standards of conduct.
B. The acceptability of behavior in business is determined only by the organization in
question.
C. Social responsibility and social ethics do not mean the same thing.
D. Businesses should only make a profit rather than consider the social implications of their
activities.
E. Most unethical activities within organizations are not supported by an organizational
culture that encourages employees to bend the rules.
Although many people use the terms social responsibility and ethics interchangeably, they do
not mean the same thing. Business ethics relates to an individual's or a work group's decisions
that society evaluates as right or wrong.
AACSB: Ethics
Bloom's: Remember
10. The Act criminalized securities fraud and toughened penalties for corporate fraud.
A. Dodd-Frank
B. Federal Trade Commission
C. Foreign Corrupt Practices
D. Sarbanes-Oxley
E. Sherman Antitrust
Congress passed the Sarbanes-Oxley Act in response to several prominent accounting

scandals. The law criminalized securities fraud and stiffened penalties for corporate fraud.
AACSB: Ethics
Bloom's: Remember
Difficulty: 1 Easy
2-5
11. Which of the following laws criminalized securities fraud and stiffened penalties for
corporate fraud?
A. The Glass-Steagall Legislation
B. The Sherman Act
C. The Sarbanes-Oxley Act
D. The Clayton Act
E. The Celler-Kefauver Act
The Sarbanes-Oxley Act was passed in 2002 by Congress to criminalize securities fraud as
well as stiffen penalties for corporate fraud. This was a response to public outcry regarding
accounting scandals in the early 2000s and to restore confidence in corporate America.
AACSB: Ethics
Bloom's: Remember
Difficulty: 1 Easy
12. The Sarbanes-Oxley Act was passed to:

A. punish those who committed accounting fraud in the late 1990s.
B. improve corporate profits.
C. help laid-off employees get their jobs back.
D. help investors recoup their losses.
E. help restore confidence in corporate America.
The Sarbanes-Oxley Act was passed in 2002 by Congress to criminalize securities fraud as
well as stiffen penalties for corporate fraud. This was a response to public outcry regarding
accounting scandals in the early 2000s and to restore confidence in corporate America.
AACSB: Ethics
Bloom's: Remember
Difficulty: 1 Easy
2-6
13. One of the most difficult things for a business to restore after an ethics scandal is:
A. regulations.
B. ethics training programs.
C. trust.
D. codes of conduct.
E. morale.
Ethical conduct builds trust and credibility. Establishing trust and confidence is much more
difficult in organizations that have reputations for acting unethically.
AACSB: Ethics
Bloom's: Understand
14. Which of the following does ethical conduct build among individuals and in business
relationships, which validates and promotes confidence in business relationships?
A. Pride
B. Trust
C. Self-reliance
D. Creativity E.
Rigor
Ethical conduct builds trust among individuals and in business relationships, which validates
and promotes confidence in business relationships.
AACSB: Ethics
Bloom's: Remember
Difficulty: 1 Easy
2-7
15. Which of the following statements is true of ethics?

A. Ethical issues are not limited to for-profit organizations.
B. Business ethics do not go beyond legal issues.
C. Ethical conduct does not have any impact on business relationships.
D. Ethical conflicts do not evolve into legal disputes.
E. Ethical issues are not affected by social perceptions.
Ethical issues are not limited to for-profit corporations but also affect government, non-profits
such as universities, sports, and individuals.
AACSB: Ethics
Bloom's: Remember
Difficulty: 1 Easy
16. Which of the following is a key step in evaluating ethical decisions in business?
A. Assuming that ethical issues do not include all areas of organizational activities B.
Recognizing that social responsibility and ethics are inversely related to each other C.
Understanding that business ethics does not go beyond legal issues
D. Identifying that ethics is not culture-specific
E. Learning how to recognize and resolve ethical issues
Learning how to recognize and resolve ethical issues is a key step in evaluating ethical
decisions in business.
AACSB: Ethics
Bloom's: Remember
Difficulty: 1 Easy
2-8
17. are payments, gifts, or special favors intended to influence the outcome of a
decision.
A. Bribes
B. Emoluments
C. Stipends D.
Grants
E. Recompenses
Bribes are payments, gifts, or special favors intended to influence the outcome of a decision.
A bribe benefits an individual or a company at the expense of other stakeholders.
AACSB: Ethics
Bloom's: Remember
Difficulty: 1 Easy
18. Which of the following is the most common ethical problem for employees?
A. Theft of time
B. Misuse of company resources
C. Intimidating behavior
D. Insider trading
E. Conflict of interest
Abusive or intimidating behavior is the most common ethical problem for employees. These
concepts can mean anything from physical threats, false accusations, profanity, insults,
yelling, harshness, and unreasonableness to ignoring someone or simply being annoying; and
the meaning of these words can differ by person.
AACSB: Ethics
Bloom's: Remember
Difficulty: 1 Easy
2-9
19. Abusive behavior is difficult to assess and manage because of:

A. the debate surrounding the acceptability.
B. ethical issues that often emerge from conflict.
C. different rating companies.
D. diversity in culture and lifestyle.
E. the fact that they lead to higher levels of unemployment.
Abusive behavior is difficult to assess and manage because of diversity in culture and
lifestyle.
AACSB: Ethics
Bloom's: Remember
Difficulty: 1 Easy
20. Which of the following acts amounts to bullying?

A. Trading within insiders
B. Discrediting others' ideas and opinions
C. Lobbying for or against someone
D. Mediating as a third party
E. Buying or selling of stocks by insiders
Actions associated with bullies include spreading rumors to damage others and discrediting
others' ideas and opinions.
AACSB: Ethics
Bloom's: Remember
Difficulty: 1 Easy
2-10
21. Within the concept of abusive behavior, should be a consideration.

A. intent
B. context
C. natural environment
D. cultural norms
E. business ethics
Within the concept of abusive behavior, intent should be a consideration.
AACSB: Ethics
Bloom's: Remember
Difficulty: 1 Easy
22. is the buying or selling of stocks by insiders who possess material that is still not
public.
A. Gatekeeping B.
Whistleblowing C.
Downcycling D.
Insider trading E.
Plagiarizing
Insider trading is an example of a conflict of interest. Insider trading is the buying or selling
of stocks by insiders who possess material that is still not public. The Justice Department has
taken an aggressive stance toward insider trading.
AACSB: Ethics
Bloom's: Remember
Difficulty: 1 Easy
2-11
23. According to the National Business Ethics Survey, is the number one area of
misconduct observed in the workplace.
A. plagiarism
B. discrimination
C. abusive behavior
D. misuse of company time
E. stealing
According to the National Business Ethics Survey, abusive behavior is the number one area of
misconduct observed in the workplace.
AACSB: Ethics
Bloom's: Remember
Difficulty: 1 Easy
24. Identify a true statement about ethics and code of conduct.

A. One of the principal causes of unethical behavior in organizations is less aggressive
financial or business objectives.
B. Among the several ethical issues of today, time theft costs can be easy to measure.
C. Within the concept of abusive behavior, intent should not be a consideration.
D. Ethics is related to the culture in which a business operates.
E. Bullying has more legal recourse than sexual harassment.
Ethics is also related to the culture in which a business operates. In the United States, for
example, it would be inappropriate for a businessperson to bring an elaborately wrapped gift
to a prospective client on their first meeting—the gift could be viewed as a bribe.
AACSB: Ethics
Bloom's: Remember
Difficulty: 1 Easy
2-12
25. Which of the following has developed a Corruption Perceptions Index?

A. Financial Executives International
B. Texas Instruments
C. National Business Ethics International
D. ORC International
E. Transparency International
Transparency International has developed a Corruption Perceptions Index.
AACSB: Ethics
Bloom's: Remember
Difficulty: 1 Easy
26. Which of the following is true of bullying?

A. Bullying is not a widespread problem in the United States.
B. Bullying can occur between companies that are intense competitors.
C. 21 percent of workplace bullies are supervisors.
D. Bullying cannot occur in all types of businesses.
E. To avoid bullying, employees must be able to consider their personal financial interests and
their business dealings as one unit.
Bullying can also occur between companies that are intense competitors. For example,
European antitrust regulators alleged that some of the world's biggest banks—including
Goldman Sachs, Morgan Stanley, and J.P. Morgan— collaborated with an industry
association to prevent exchanges from offering and trading in credit derivatives.
AACSB: Ethics
Bloom's: Remember
Difficulty: 1 Easy
2-13
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Chapter 02 - Business Ethics and Social Responsibility

True / False Questions

1. All business decisions cannot be judged as right or wrong, ethical or unethical.

2. An ethical issue is an identifiable problem, situation, or opportunity that requires a person

3. Ethical decisions in an organization are influenced by individual moral standards.

4. The concept of social responsibility is universally accepted.

Multiple Choice Questions

7. Which of the following statements is true?

9. Which of the following statements is true?

Congress passed the Sarbanes-Oxley Act in response to several prominent accounting

12. The Sarbanes-Oxley Act was passed to:

15. Which of the following statements is true of ethics?

19. Abusive behavior is difficult to assess and manage because of:

20. Which of the following acts amounts to bullying?

21. Within the concept of abusive behavior, should be a consideration.

Within the concept of abusive behavior, intent should be a consideration.

24. Identify a true statement about ethics and code of conduct.

25. Which of the following has developed a Corruption Perceptions Index?

Transparency International has developed a Corruption Perceptions Index.

26. Which of the following is true of bullying?

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