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Your assignment is to prepare and submit a paper on deep analysis. The reverse is also true. meaning when the market demand slackens there will be a decline in capacity utilization. In the economic sc
Your assignment is to prepare and submit a paper on deep analysis. The reverse is also true. meaning when the market demand slackens there will be a decline in capacity utilization. In the economic scene, capacity utilization is employed to track inflation pressures (Nelson 275). In United States, data on capacity utilization is released on monthly bases by the Federal Reserve Board. This helps in tracking the extent to which the country’s productive capacity is being utilized and also forecast likely growth or decline in various sectors. Capacity utilization is measured by deducting actual production from potential production. Capacity Utilization=Real actual output-Real potential Output The data released by the Federal Reserve Bank can be plotted in a graph to show historical developments in capacity utilization. Notably, capacity utilization is represented in percentages, 100% is considered a maximum level of production. Such a graph is represented in the next part. the data represented is from 1965 through to 2012 (Federal Bureau of Reserve). Capacity Utilization in United States of America Year Question 3 One of the emergent findings is that the overall capacity utilization has declined over the years. In the 1960s capacity utilization averaged around 85 percent.