Economic research over the last 20 years suggests that expectations are best modeled as_____ variables?.

Question

Quizplus · Accepted Answer

Economic research has shown that expectations cannot be treated as exogenous or independent variables. Instead, they are endogenous, which means they are affected by the same factors that determine other economic variables. Therefore, it is important to model expectations as endogenous variables in economic analysis.

Economic Research Over the Last 20 Years Suggests That Expectations