Briefly explain how capacity utilization rates are used by forecasters
What will be an ideal response?
Capacity utilization rate is the ratio of production to capacity. Higher capacity utilization rates give firms the incentive to expand capacity through investment in new structures and equipment. Forecasters estimate that the threshold level for capacity utilizations rates to be around 83 to 85 percent. Capacity utilization rates above this threshold suggest that businesses will increase investment in structures and equipment to expand capacity to meet expected demands for their products. Capacity utilization rates below this threshold suggest that businesses will cut back on capital spending and focus their attention on replacement of inefficient facilities.
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During 2008 and 2009, the debt to GDP ratio in the United States
A) remained relatively unchanged, as it has since the mid 1970s. B) fell to its lowest level since World War I. C) is the highest it has been since the founding of the country. D) rose to its highest level since World War II.
The process of indirect finance using financial intermediaries is called
A) direct lending. B) financial intermediation. C) resource allocation. D) financial liquidation.