Distinguish between exogenous variable and endogenous variable.

Exogenous variables are external factors that are not influenced by the model being studied. They are typically considered to be independent variables that affect the outcome of the model. Endogenous variables, on the other hand, are internal factors that are influenced by the model being studied. They are typically considered to be dependent variables that are affected by the exogenous variables in the model. In other words, exogenous variables are inputs to the model, while endogenous variables are outputs of the model.

Exogenous Variable

- Also known as an independent variable or control variable.
- Originates outside of the system or model being studied.
- Influences other variables within the system, but is not itself affected by them.
- Controlled by external factors or experimenter.
- Example: Government spending in an economic model.

Endogenous Variable

- Also known as a dependent variable or outcome variable.
- Originates within the system or model being studied.
- Is influenced by other variables within the system.
- Can affect other variables in the system, but is also affected by them.
- Not directly controlled by external factors.
- Example: Economic growth in an economic model.

Key Differences:

- Origin: Exogenous variables come from outside the system, while endogenous variables come from within the system.
- Control: Exogenous variables can be controlled by external factors, while endogenous variables cannot.
- Influence: Exogenous variables influence endogenous variables, but endogenous variables also influence each other.
- Causation: Exogenous variables are often used to determine the cause of changes in endogenous variables.