An endogenous variable is:
A)a variable that an economic agent chooses.
B)consumption, investment or government spending.
C)a variable determined within the economic system being studied.
D)a variable pertaining to the home country economy.

Question

Quizplus · Accepted Answer

An endogenous variable is one that is determined within the economic system being studied. It is the outcome of decisions made by economic agents within the system and reflects the interactions between these agents. Consumption, investment, and government spending may be examples of endogenous variables in certain economic models, but they are not a definition of the term itself. Similarly, a variable pertaining to the home country economy may or may not be endogenous, depending on the context of the analysis. An endogenous variable is a variable determined within the economic system being studied, rather than being assumed as an external parameter or determined by outside factors. It is often used in economic models to reflect the interactions between different agents and factors within the system. Option A is incorrect because while an economic agent may choose an endogenous variable, not all endogenous variables are chosen by agents. Option B is incorrect because while consumption, investment and government spending are common examples of endogenous variables, not all endogenous variables fall under these categories. Option D is incorrect as it is too narrow and limiting.

An Endogenous Variable Is