Which type of variable has a value that is influenced by other economic factors?

An endogenous variable is defined as a variable whose value is determined by the relationships and interactions within a given model, often influenced by other variables in the system. In economics, this means that the value of an endogenous variable can change in response to alterations in external factors or other variables. For instance, in a supply and demand model, the quantity supplied and quantity demanded are considered endogenous variables, since they are affected by changes in price, consumer preferences, production costs, and other factors.

The concept of endogenous variables is crucial in understanding dynamic economic models, as they reflect how the economy operates based on various interactions among different components. This interdependence allows economists to analyze how changes in one part of the economy can reverberate through the system, impacting overall economic performance.

In contrast, exogenous variables are external to the model and are not influenced by the model's other variables; they are often treated as constants or inputs in the analysis. Fixed variables remain constant regardless of different conditions, while static variables do not change with time or conditions, further differentiating them from the inherently flexible nature of endogenous variables.