Microeconomics focuses on individual markets for goods and services, while macroeconomics focuses on aggregate economic activity. Managers should understand the macroeconomy in order to prepare for or operate more effectively over different phases of the business cycle. For example, if managers believe that the economy will soon come out of a recession, they may want to begin building inventories or making certain capital investments in order to better handle the increased demand which accompanies a recovery. Alternatively, managers may want to consider diversifying their firm’s portfolio of goods and services to include some products that are “recession proof” (i.e., those with