All of the following are endogenous variables in the dynamic model of aggregate demand and aggregate supply except: A)Y_t, output. B)π_t* the central bank's inflation target. C)r_t, the real interest rate. D)E_tπ_{t + 1}, expected inflation.

Question

Quizplus · Accepted Answer

The central bank's inflation target (π_t*) is an exogenous variable, as it is set by the central bank and not determined within the model.

All of the Following Are Endogenous Variables in the Dynamic