capacity utilization
As discussed in class, the long term trend in capacity utilization in the US has been down. Why do you suppose this is? Address the following:
1) Define capacity utilization. How is it measured?
2) Use the Fed’s data download program (Links to an external site.) at its industrial production and capacity utilization site (Links to an external site.) to obtain historical capacity utilization data (recommendation: focus on manufacturing and get annual data going back to 1948, which is the beginning of the time series). Plot the data on a line graph (Links to an external site.). What do the data indicate?
3) Are these findings to be expected? Explain.
4) Propose at least two factors that might explain long term trends in capacity utilization. Discuss these factors and their relationship to capacity utilization in detail. Cite outside sources to strengthen your argument.
5) What, if anything, should be done to reverse prevalent trends? Again, discuss in detail.
The more in-depth your analysis, the more extra credit points you will earn.
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