Choose the statement that best describes how endogenous variables differ from exogenous variables.
A)An endogenous variable is a flow,while an exogenous variable is a stock.
B)An endogenous variable is explained outside the theory and influences an exogenous variable while an exogenous variable is explained within the theory.
C)An exogenous variable is a function of the endogenous variable,and both are flow variables.
D)An endogenous variable is a function of the exogenous variable,and both are stock variables.
E)An endogenous variable is explained within the theory,while an exogenous variable influences the endogenous variables but is determined outside the theory.

Question

Quizplus · Accepted Answer

An endogenous variable is explained within the theory and is influenced by exogenous variables but is determined by factors within the model, while an exogenous variable is determined outside the theory and influences the endogenous variables but is not explained within the model. Therefore, the best answer is E.

Choose the Statement That Best Describes How Endogenous Variables Differ