ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -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-2: -Variables like the number of crops produced are endogenous, and they often depend on several other variables, including pests, crop diseases and weather, which are exogenous variables that exist outside of the model.

Detailed explanation-3: -An exogenous variable is a variable that is not affected by other variables in the system. For example, take a simple causal system like farming. Variables like weather, farmer skill, pests, and availability of seed are all exogenous to crop production.

Detailed explanation-4: -Endogenous and Exogenous Variables: In an economic model, there are two types of variables. Variables whose values could be determined outside the model, i.e., without solving the model, are called exogenous variables. Variables whose values are determined within the model are called endogenous variables.

Detailed explanation-5: -The exogenous variable is GDP, while the endogenous variable is labor. GDP is determined by the sum of the inputs (labor and capital) into the economy, while labor is determined by the number of people working in the economy.