Question

Exchange rates are included in which of the following international environments?

a.
The barter system environment
b.
The government sector
c.
The economic environment
d.
The sociocultural environment
e.
The legal-political sector

Answer 1

The subject of exchange rates is classified under the economic environment in the international business context. They are influenced by the currency supply/demand, interest rates, and government policies, and nations can choose between different exchange rate regimes.

Step-by-step explanation:

Exchange rates fall within the economic environment. They are an essential part of international finance and are influenced by various factors, including the supply and demand of a currency, domestic interest rates, and macroeconomic policies.

When discussing exchange rate regimes, a nation can adopt from a variety of policies such as floating (flexible) exchange rates where the market determines the rates, fixed (pegged) exchange rates where governments manage the value, to a common currency adopted from another country or group of countries. For developing countries with moderate to high inflation rates and significant international trade, the choice of an exchange rate regime is crucial and is often a subject of debate among economists.