1. Endogenous Variables
Endogenous variables are those whose value is determined within the model. Some typical endogenous variables used in microeconomics models are consumption, Demand, supply, investment, price level etc.
2. Exogenous Variables
These are those variables that are determined outside the model. E.g. Money supply, etc. however depending on the objective of analysis, endogenous variables are converted into exogenous variables, and exogenous variables can be endogenized.
What is important now is to collect the data and test the validity of the model. This is the empirical testing of the model. The model developed is therefore used to make economic generalization and hence formulation of policies.
Wilfykil answered the question on March 20, 2019 at 05:59