Final answer:
The correct term to use is 'portends', indicating future economic problems due to a decline in automobile sales. Government intervention helped the industry survive a tough period. Furthermore, a price ceiling does not shift demand or supply but sets a maximum price that can cause a shortage.
Step-by-step explanation:
Economists believe that the drop in automobile sales and steep production portends serious problems for businesses in the future. The correct word to use in this context is 'portends' because it means that it serves as a sign or warning that something, often something bad or unwelcome, is likely to happen. On the other hand, 'countermands' means to revoke an order. Therefore, about the signal of future economic challenges, 'portends' is the appropriate term.
The economic downturn had wide-ranging effects, including a significant impact on the U.S. automotive industry as consumer preferences shifted away from large, fuel-inefficient vehicles due to a variety of factors such as loan availability, fuel costs, and environmental concerns. These challenges led to nearly destroying the U.S. auto industry but with government intervention including emergency loans, the industry was able to weather the storm at the cost of transformational change including dealership closures and the subsequent local economic implications.
Illustrating the effect of a price ceiling, it's crucial to state that a price ceiling does not shift the demand or supply curves. Instead, it sets a maximum price for a good or service which can lead to a shortage if set below the equilibrium price, since the quantity demanded would exceed the quantity supplied. Therefore, the correct answer to the question is. neither'.