All else constant, exogenous uncertainty creates an incentive to postpone investment.

Question

Quizplus · Accepted Answer

Exogenous uncertainty refers to uncertainty that is beyond the control of the firm, such as changes in government policies or unpredictable shifts in market conditions. Such uncertainty creates a sense of risk and makes the future outcomes of investment uncertain, leading firms to postpone investment decisions until greater clarity is achieved.

All Else Constant, Exogenous Uncertainty Creates an Incentive to Postpone