The definition of an exogenous variable is:
A)a variable whose value is determined within the model under study.
B)a variable whose value is determined outside the model under study.
C)a variable whose value is determined through constrained optimization.
D)a variable whose value is determined through comparative statics.

Question

Quizplus · Accepted Answer

An exogenous variable is a variable whose value is determined outside the model under study. It is typically used as a control variable in economic models to account for factors that are beyond the control of the model, but still have an impact on the outcome. Therefore, option B is the correct choice. An exogenous variable is a variable whose value is determined outside of the model under study. It is not influenced by any other factors within the model and is considered to be independent. This is in contrast to an endogenous variable which is influenced by other variables within the model and is considered to be dependent.

The Definition of an Exogenous Variable Is