The Dreaded Money and Banking DSST (And Feedback)

[Blonco]

I have gone through the flashcards from IC and luckily, a majority of the information provided on IC seems pretty fimiliar since I have already taken several finance classes, economic classes, and CLEPs. I will continue to review the information and pay for the DSST test that their website offers.

My question is, once you pay for the test off of the DSST website, can you print them out, or are they only online like the Peterson's test?

Any other tips and suggestions on this test would be appreciated. I have searched through the forum and found a couple of post that give some insight to the test.

[Blonco]

Did this test give anyone else anxiety attacks? I have been studying IC and the DSST practice test but I am still worried? How the heck did you compute the PF and FV without a calculator? How about coupons? I'm a little stressed...I take this tomorrow!

[Bongsau]

On the Dantes website, you buy the test and you can't print it out to study it... BUT, if you are clever, you just copy the question as you go and paste it into a word document to study for later. Make sure that you check which answer you think it is before pasting it into word; when you finish, it will print out a list of all the questions you missed, with the correct answers. When you put the two together, you know the answer to every question.

then, buy the second Dantes test for another $20 and to the same thing. Memorize all the answers off of your printed practice tests, and then take the online test once more (you can take each test twice). All this repetition will help to seal it in your memory.

Remember, on multiple choice tests, you don't have to know all the answers; you just have to know the principles well enough to recognize enough of the options to zero in on the correct answer.

You can do it!

[Blonco]

I took the test today. Overall, I feel confident that I passed this one. Seems strange, but I feel better on this one than I did the Org Behavior DSST. Maybe because I have done Micro, Macro, Acct, Finance, and several other upper division Economics classes at my B & M school, I feel that I knew the concepts well enough hopefully to wing this one.

As far as feedback goes, I can't stress that you should know every single aspect of the FED. I know that is not great feedback but this test should be renamed from Money and Banking to the Federal Reserve System Test. It is such a broad test over the FED it is hard to narrow it down.

Heres a few things to know..

Who appoints the FED members and how long for
What is Q regulation and when does it have the biggest impact
Float
Mulitpliers
Keynesian Economics
What the IMF and World Bank were established for...
Foreign exchange rates

I didnt have any questions that required math (Thank God)

Thats about it...Also, if anyone is interested, I have the DSST test copied and pasted in a Word File. My loss is your gain.

[yutzyj]

I took the test today. Overall, I feel confident that I passed this one. Seems strange, but I feel better on this one than I did the Org Behavior DSST. Maybe because I have done Micro, Macro, Acct, Finance, and several other upper division Economics classes and my B & M school, I feel that I knew the concepts well enough hopefully to wing this one.

Thats about it...Also, if anyone is interested, I have the DSST test copied and pasted in a Word File. My loss is your gain.

Hi Blonco-
Sounds like you had this test nailed down. Could you please email me your practice test? That would help me a lot. I'm not looking forward to taking this test and I keep putting it off.

[Blonco]

I will get them out to you when I get home today from work. This test isn't as scary as I thought it would be. I say that it is about as difficult as Microeconomics.

[bceagles]

Keynesian economics (pronounced /ˈkeɪnzjən/), also called Keynesianism, or Keynesian Theory, is an economic theory based on the ideas of 20th century British economist John Maynard Keynes. Keynesian economics promotes a mixed economy, where both the state and the private sector play an important role. Keynesian economics differs markedly from laissez-faire economics (economic theory based on the belief that markets and the private sector operate well on their own, without state intervention).

In Keynes's theory, general (macro-level) trends can overwhelm the micro-level behavior of individuals. Instead of the economic process being based on continuous improvement in potential output, as most classical economists had believed from the late 1700s on, Keynes asserted the importance of aggregate demand for goods as the driving factor of the economy, especially in periods of downturn. From this he argued that government policies could be used to promote demand at a macro level, to fight high unemployment and deflation of the sort seen during the 1930s.

A central conclusion of Keynesian economics is that there is no strong automatic tendency for output and employment to move toward full employment levels. This conclusion conflicts with the tenets of classical economics, and those schools, such as supply-side economics or the Austrian School, which assume a general tendency towards a welcome equilibrium in a restrained money-creating economy. In neoclassical economics, which combines Keynesian macro concepts with a micro foundation, the conditions of General equilibrium allow for price adjustment to achieve this goal.

More broadly, Keynes saw his as a general theory, in which utilization of resources could be high or low, whereas previous economics focused on the particular case of full utilization.

Historical background

Keynes questioned two of the dominant pillars of economic theory: the need for a solid basis for money, generally a gold standard, and the theory, expressed as Say's Law, which stated that decreases in demand would only cause price declines, rather than affecting real output and employment.

In his political views, Keynes was no revolutionary. He was pro-business and pro-entrepreneur, but was very critical of rentiers and speculators, from a somewhat Fabian perspective. He was a "new" or modern liberal.

It was his experience with the Treaty of Versailles which pushed him to make a break with previous theory. His The Economic Consequences of the Peace (1920) not only recounted the general economics, as he saw them, of the Treaty, but the individuals involved in making it. The book established him as an economist who had the practical political skills to influence policy. In the 1920s, Keynes published a series of books and articles which focused on the effects of state power and large economic trends, developing the idea of monetary policy as something separate from merely maintaining currency against a fixed peg. He increasingly believed that economic systems would not automatically right themselves to attain "the optimal level of production." This is expressed in his famous quote, "In the long run, we are all dead," implying that it does not matter that optimal production levels are attained in the long run, because it would be a very long run indeed.

In the late 1920s, the world economic system began to break down, after the shaky recovery that followed World War I. With the global drop in production, critics of the gold standard, market self-correction, and production-driven paradigms of economics moved to the fore. Dozens of different schools contended for influence. Further, some pointed to the Soviet Union as a successful planned economy which had avoided the disasters of the capitalist world and argued for a move toward socialism. Others pointed to the supposed success of fascism in Mussolini's Italy.

Into this tumult stepped Keynes, promising not to institute revolution but to save capitalism. He circulated a simple thesis: there were more factories and transportation networks than could be used at the current ability of individuals to pay and that the problem was on the demand side.

But many economists insisted that business confidence, not lack of demand, was the root of the problem, and that the correct course was to slash government expenditures and to cut wages to raise business confidence and willingness to hire unemployed workers. Yet others simply argued that "nature would make its course," solving the Depression automatically by "shaking out" unneeded productive capacity.



Postwar Keynesianism

After Keynes, Keynesian analysis was combined with classical economics to produce what is generally termed "the neoclassical synthesis" which dominates mainstream macroeconomic thought. Though it was widely held that there was no strong automatic tendency to full employment, many believed that if government policy were used to ensure it, the economy would behave as classical or neoclassical theory predicted.

In the post-WWII years, Keynes's policy ideas were widely accepted. For the first time, governments prepared good quality economic statistics on an ongoing basis and had a theory that told them what to do. In this era of new liberalism and social democracy, most western capitalist countries enjoyed low, stable unemployment and modest inflation.

It was with John Hicks that Keynesian economics produced a clear model which policy-makers could use to attempt to understand and control economic activity. This model, the IS-LM model is nearly as influential as Keynes' original analysis in determining actual policy and economics education. It relates aggregate demand and employment to three exogenous quantities, i.e., the amount of money in circulation, the government budget, and the state of business expectations. This model was very popular with economists after World War II because it could be understood in terms of general equilibrium theory. This encouraged a much more static vision of macroeconomics than that described above.[citation needed]

The second main part of a Keynesian policy-maker's theoretical apparatus was the Phillips curve. This curve, which was more of an empirical observation than a theory, indicated that increased employment, and decreased unemployment, implied increased inflation. Keynes had only predicted that falling unemployment would cause a higher price, not a higher inflation rate. Thus, the economist could use the IS-LM model to predict, for example, that an increase in the money supply would raise output and employment—and then use the Phillips curve to predict an increase in inflation. [citation needed]

Through the 1950s, moderate degrees of government demand leading industrial development, and use of fiscal and monetary counter-cyclical policies continued, and reached a peak in the "go go" 1960s, where it seemed to many Keynesians that prosperity was now permanent. However, with the oil shock of 1973, and the economic problems of the 1970s, modern liberal economics began to fall out of favor. During this time, many economies experienced high and rising unemployment, coupled with high and rising inflation, contradicting the Phillips curve's prediction. This stagflation meant that both expansionary (anti-recession) and contractionary (anti-inflation) policies had to be applied simultaneously, a clear impossibility. This dilemma led to the rise of ideas based upon more classical analysis, including monetarism, supply-side economics and new classical economics. This produced a "policy bind" and the collapse of the Keynesian consensus on the economy.[citation needed]

Classical economics
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Classical economics is widely regarded as the first modern school of economic thought. Its major developers include Adam Smith, David Ricardo, Thomas Malthus and John Stuart Mill. Sometimes the definition of classical economics is expanded to include William Petty, Johann Heinrich von Thünen, and Karl Marx.

The publication of Adam Smith's The Wealth of Nations in 1776 is usually considered to mark the beginning of classical economics. The school was active into the mid 19th century and was followed by neoclassical economics in Britain beginning around 1870.

[bceagles]

Classical economists attempted and partially succeeded to explain growth and development. They produced their "magnificent dynamics" during a period in which capitalism was emerging from a past feudal society and in which the industrial revolution was leading to vast changes in society. These changes also raised the question of how a society could be organized around a system in which every individual sought his or her own (monetary) gain. Why would such a society not collapse in chaos?

Classical economists reoriented economics away from an analysis of the ruler's personal interests to a class-based interest. Physiocrat Francois Quesnay and Adam Smith, for example, identified the wealth of a nation with the yearly national income, instead of the king's treasury. Smith saw this income as produced by labor applied to land and capital equipment. Once land and capital equipment are appropriated by individuals, the national income is divided up between laborers, landlords, and capitalists in the form of wages, rent, and interest.

Recession
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A recession is traditionally defined in macroeconomics as a decline in a country's real Gross Domestic Product (GDP) for two or more successive quarters of a year (equivalently, two consecutive quarters of negative real economic growth). However this definition is not universally accepted. The National Bureau of Economic Research defines a recession more ambiguously as "a significant decline in economic activity spread across the economy, lasting more than a few months." A recession may involve simultaneous declines in coincident measures of overall economic activity such as employment, investment, and corporate profits. Recessions may be associated with falling prices (deflation), or, alternatively, sharply rising prices (inflation) in a process known as stagflation. A severe or long recession is referred to as an economic depression. A devastating breakdown of an economy is called economic collapse.

Market-oriented economies are characterized by economic cycles, but actual recessions (declines in economic activity) do not always result. There is much debate as to whether government intervention smooths the cycle (see Keynesianism), exaggerates it (see Real business cycle theory), or even creates it (see monetarism).

[Blonco]

Well, I have't sent my scores yet, but I called my B & M school to see if they received my transcripts yet for this test. The lady in the registrar's office said they had received them on the 2nd and were processing it. I asked her if I would be receiving credit for the class, and she stated, "Yes, you passed!" So another one bites the dust.

If anyone has already done Micro, Macor, Finance, and Accounting, he/she should be good for this test. Study the IC flashcards and really get a good understanding for the FED.

[auminer49r]

Do you want to understand Keynesian Theories and about the FED? Watch these educational videos right now on your computer:

Resource: Economics U$A

Resource: The Economics Classroom: A Workshop for Grade 9-12 Teachers

Click on VOD buttons (Video on Demand) for the show you want to watch.

It's all free, just click and watch.

This site really helped me through Macroeconomics and it will soon help me with Money and Banking too.