In Money Supply Model,Which of the following options is endogenous variables?This is a multi answer question. You can select one or more options as the answer.A.Monetary Base (B) , B=C+RB.Money Supply (M) , M=C+DC.Currency-deposit ratio(cr) , cr=C/DD.Reserve-deposit ratio(rr) , rr=R/D
Question
In Money Supply Model,Which of the following options is endogenous variables?This is a multi answer question. You can select one or more options as the answer.A.Monetary Base (B) , B=C+RB.Money Supply (M) , M=C+DC.Currency-deposit ratio(cr) , cr=C/DD.Reserve-deposit ratio(rr) , rr=R/D
Solution
In the money supply model, endogenous variables are those that are determined within the model. They are influenced by other variables in the model and can change in response to them.
Given the options:
A. Monetary Base (B) - This is typically considered an exogenous variable because it is determined by the central bank's actions, not by the model itself.
B. Money Supply (M) - This is an endogenous variable because it can change in response to changes in other variables in the model, such as the reserve ratio, the currency ratio, and the monetary base.
C. Currency-deposit ratio (cr) - This is an endogenous variable because it can change in response to changes in other variables in the model, such as interest rates and economic conditions.
D. Reserve-deposit ratio (rr) - This is an endogenous variable because it can change in response to changes in other variables in the model, such as the central bank's reserve requirements and economic conditions.
So, the correct answers are B, C, and D.
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