Which of the following is an endogenous variable in the dynamic model of aggregate demand and aggregate supply? A)π_t, inflation B)π_t* the central bank's inflation target C)ρ, the natural rate of interest D)π_{t - 1}, the previous period's inflation

Question

Quizplus · Accepted Answer

In the dynamic model of aggregate demand and aggregate supply, π_t (current inflation) is an endogenous variable because it is determined within the model by the interaction of aggregate demand and aggregate supply.

Which of the Following Is an Endogenous Variable in the Dynamic