Our economy is a very complex part of our life consisting of many major and minor parts. The following are the biggest and most important parts of our economy that play an enormous part of our life and the life of our country.CAPACITY UTILIZATIONThe Federal Reserve which compiles this data defines the term as "the greatest level of output that a plant can maintain within the framework of a realistic work schedule, taking account of normal downtime, and assuming sufficient availability of [raw materials] to operate the machinery and equipment in place". In other words, capacity utilization measures actual production as a percent of the maximum output, which the industry (manufacturing, mining, or gas and electric utilities) can produce when its plant and equipment facilities and work force are fully applied. For example if capacity utilization is said to be 82% for a given month, this means that 82% of the nation's industrial capacity is being used that month to build cars and turn out other products. First of all these measures are used to predict future plant and equipment investment and second of all to foreshadow future price movements. Traditionally, capacity utilization is used as an indicator of inflation, especially when it consistently goes above the 82%-84% level. When factories operate so close to full capacity, companies are more likely to raise prices.Capacity utilization also shows the employment trends. When production is at peak levels, factories tend to hire more people and/or have employees work more overtime.*******************************************************CONSUMER PRICE INDEXThe Consumer Price Index (CPI) measures changes in the prices of goods and services bought by households. It measures the price of a "market basket" of goods and services typically purchased by consumers. The CPI is the most commonly watched indicator of inflation in the economy. It is used to deflate economic measures of GDP, personal inc...
