Transmission and Amplification Mechanisms: Work It Out In the chapter, we discussed how intertemporal substitution can amplify a boom by causing people to work more and by causir more people to work (while the reverse is true in a recession). Capital is also subject to intertemporal substitution. For example it's possible to run a factory at close to capacity in one period, while putting off maintenance to a later period. How do you think capacity utilization varies across the business cycle? Capacity utilization Oclosely tracks fluctations in real GDP. moves opposite to fluctuations in real GDP. O is fairly constant throughout the business cycle. Is capacity utilization procyclical (varies positively with GDP) or countercyclical (varies negatively with GDP)? Capacity utilization moves 7022-03 5.35 PM 21.06.PM Regulati...signment Planning...ignment Guide Question 4 of 15 > Capacity utilization Oclosely tracks fluctations in real GDP. moves opposite to fluctuations in real GDP. is fairly constant throughout the business cycle. Is capacity utilization procyclical (varies positively with GDP) or countercyclical (varies negatively with GDP)? Capacity utilization moves O independently of GDP. procyclically with GDP. countercyclically with GDP. 819 01-4 W ILE C df