An endogenous variable
A) is the independent variable in an economic model.
B) is assumed to be determined by factors outside the scope of the model.
C) is the impulse that causes a change in the exogenous variable.
D) is the response to a change in the exogenous variable.
E) is the rental rate of capital in the labor demand equation.

Question

Quizplus · Accepted Answer

An endogenous variable is a variable that is determined within the scope of the economic model as a response to changes in other variables, typically exogenous variables. Therefore, option D, "is the response to a change in the exogenous variable," is the correct choice. Options A, B, C, and E are not accurate descriptions of endogenous variables.

An Endogenous Variable