ECONOMICS
FOREIGN CURRENCY MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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endogenous
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exogenous
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Either A or B
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None of the above
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Detailed explanation-1: -Consumption is an endogenous variable. It depends on an other variable of the model (Y ). Figure: Consumption as a function of the disposable income. Investment is an exogenous variable.
Detailed explanation-2: -An endogenous variable is a variable in a statistical model that’s changed or determined by its relationship with other variables within the model. In other words, an endogenous variable is synonymous with a dependent variable, meaning it correlates with other factors within the system being studied.
Detailed explanation-3: -Exogenous variables are independent, and endogenous variables are dependent. Therefore, if the variable does not depend on variables within the model, it’s an exogenous variable. If the variable depends on variables within the model, though, it’s endogenous.
Detailed explanation-4: -An endogenous variable is a variable that depends on other variables in a statistical and/or economic model. If the value changes for an endogenous variable, it is because there are changes to its relationships with other variables in the same model.