In a System of 4 Simultaneous Equations,how Many Endogenous Variables

question 2

Multiple Choice

In a system of 4 simultaneous equations,how many endogenous variables must be excluded from an equation in the system for the parameters to be identified?

• A)1
• B)2
• C)3
• D)4

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Definitions:

Inflationary Recessions

Occurs when the economy faces stagnation or contraction alongside rising inflation rates.

Aggregate Demand

The overall request for every good and service within an economic system at varying prices over a particular timeframe.

Monetary Policy

Actions of a central bank, currency board, or other regulatory authorities that determine the size and rate of growth of the money supply, which in turn affects interest rates.

Fiscal Policy

Government policies regarding taxation and spending that influence economic conditions.