What are the three rules of the gold standard?

i. Fix the value of the currency in terms of gold (when 2 countries do this, it also fixes the exchange rate between their 2 countries).

ii. Keep the supply of domestic money supply fixed in some constant proportion to their supply of gold. (Thus money supply increases or decreases as they acquire or lose gold).

iii. Stand ready to redeem their own currency with payments in gold and permit gold to be exported or imported. (both causes the market exchange rate to equal the official one, and caues the gold stock and hence the money supply to respond to excess supply and demand for the currency.

errrm. ok.
~ECON 340~