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Author Question: Briefly define an endogenous variable and an exogenous variable. What variables are endogenous in ... (Read 92 times)

PhilipSeeMore

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on: Jun 30, 2018
Briefly define an endogenous variable and an exogenous variable. What variables are endogenous in the classical model? What variables are exogenous.
 
  What will be an ideal response?

Question 2

For a consumer not bound by the collateral constraint, a reduction in the price of the collateral leads to
 
  A) nothing.
  B) an increase in current consumption and a decrease in future consumption.
  C) a decrease in current consumption and no change in future consumption.
  D) a decrease in current and future consumption.


thall411

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Reply #1 on: Jun 30, 2018
Answer to Question 1

An endogenous variable is a variable whose value is determined within or by the model whereas the value of an exogenous variable is determined by forces outside the model. The real wage, the level of labor, and output are endogenous in the classical model. Exogenous variables include labor supply, capital, and technology.

Answer to Question 2

D


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