Which of the following is an exogenous variable in the model of a small open economy, but an endogenous variable in the model of a large open economy?
A) rw
B) C
C) Y
D) NX
E) G

Question

Quizplus · Accepted Answer

In a small open economy, the world interest rate (rw) is determined exogenously, while in a large open economy, it is endogenous, determined by the domestic saving and investment decisions. The other variables listed (C, Y, NX, G) are endogenous in both models.

Which of the Following Is an Exogenous Variable in the Model