Macroeconomics studies the economy as a whole; it looks at the aggregate outcomes of all the decisions that consumers, firms, and the government make in an economy. It is about the aggregate variables—for example, the overall levels of output, consumption. It is also about understanding the long-term forces that drive the economy and shape the business environment. It focuses on the exchange rate (the price of one country’s money in terms of that of another country) or the interest rate (the price of spending today rather than tomorrow). Understanding macroeconomics is not simply a useful aspect of the PR role of the business person; nor is it solely related to better understanding government policy. The health of a company depends on the macroeconomy. Macroeconomic events like changes in interest rates, fluctuations in exchange rates, and shifts in the overall level of stock market prices affect individual companies. More local events—like a rise in the wages of the company’s workforce or the bankruptcy of a competitor—are also important. Both these types of factor—the localized and the general—are uncertain. Economists distinguish between two types of uncertainty: aggregate and idiosyncratic. Aggregate uncertainty affects all firms and sectors in the economy; idiosyncratic uncertainty affects only a few firms or industries. Macroeconomics is essentially about the aggregate sources of uncertainty that affect firms
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