Answer to Question #269263 in Macroeconomics for Mehwash Sk

Question

If you were studying the following relationships, which variable would be exogenous and which would be endogenous?

a. The effect of investment growth on the growth rate of GDP.

b. The relationship between the amount of sunshine and plant growth.

c. The relationship between hours of studying and GPA.

Answer 1

(a)

The effect of investment growth on the growth rate of GDP.

Investment growth is an exogenous variable. It occurs due to influences outside the economy. Growth rate of GDP is an endogenous variable.

(b)

The relationship between the amount of sunshine and plant growth.

Amount of sunshine is an exogenous variable while plant growth is an endogenous variable.

(c)

The relationship between hours of studying and GPA.

Hours of studying is an exogenous variable whereas GPA is an endogenous variable.