In the dynamic model of money,
A)both people's income and money supply are endogenous variables.
B)both people's income and money supply are exogenous variables.
C)people's income is an endogenous variable, while money supply is an exogenous variable.
D)people's income is an exogenous variable, while money supply is an endogenous variable.

Question

Quizplus · Accepted Answer

In the dynamic model of money, people's income is considered an endogenous variable because it is determined within the model, reflecting the interactions within the economy. On the other hand, the money supply is typically treated as an exogenous variable, set by the central bank or monetary authority outside the model's internal dynamics.

In the Dynamic Model of Money