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In studying the general environment, organizations look at the effects of currency exchange rates on their business activity. In the general environment, the evaluation of exchange rates fall under which category?

a. demographic
b. political/legal
c. economic
d. global

1 Answer

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Final answer:

The evaluation of exchange rates in the general environment falls under the economic category (option c), as exchange rates are directly related to economic activities impacting international trade and financial flows.

Step-by-step explanation:

When studying the general environment, organizations consider the influence of various factors on their business activity. Among these factors is the exchange rate, which is the price of one country's currency in terms of another's. Understanding how exchange rates impact trade is crucial, as exchange rates affect the cost of imports and exports, and in turn, the aggregate demand in the economy.

In the context of analyzing the general environment and its categories, the evaluation of exchange rates falls under the economic category. This is because exchange rates directly relate to economic activities such as international trade, financial flows, and central bank policies. It is essential for businesses to monitor exchange rates to manage the macroeconomic effects that can arise from their fluctuations, such as impacts on international trade, difficulties for firms and banks, and potential for creating unsustainable financial capital flows.

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