In a simultaneous equations model, if any variable is determined outside of the model, then it is considered a(n):
A)endogenous variable.
B)random variable.
C)exogenous variable.
D)error variable.

Question

In a simultaneous equations model, if any variable is determined outside of the model, then it is considered a(n):​
A)​endogenous variable.
B)​random variable.
C)​exogenous variable.
D)​error variable.

Quizplus · Accepted Answer

An exogenous variable is determined outside of the model and is not influenced by the other variables in the model, whereas endogenous variables are determined within the model and are potentially influenced by other variables. Random variables refer to variables that cannot be predicted with certainty and error variables refer to the difference between the actual and predicted values of an endogenous variable in the model. Therefore, the correct choice is C.

In a Simultaneous Equations Model, If Any Variable Is Determined