U.S. auto sales took a beating in September 2008 as the nation's worsening economy turned dealer showrooms into ghost towns. Automakers reported a sharp drop-off in sales in the last ten days of the month as news of bank failures and a stock market meltdown increased economic uncertainty. What type of constraint do the automakers face when there is increased economic uncertainty?

Question

Quizplus · Accepted Answer

Increased economic uncertainty leads to information constraint as consumers are less certain about their future income and spending, making them more hesitant to make large purchases like cars.

US Auto Sales Took a Beating in September 2008 as the Nation's