Question

2.1 The Rules of the Game. Under the gold standard, all national governments promised to follow the "rules of the game" What did this mean?

Answer 1

Under the gold standard, all national governments promised to follow the "rules of the game " , this simply means defending the fixed exchange rate. It refers to each country adhering to par value in terms of gold. In this every country sets their own rate at which the country unit could be converted to certain unit of gold. The gold standard was a system that limited the growth in money supply. It limited the growth at the rate to which the authorities could acquire gold. It was essentially a fixed system. it is very necessary to maintain the reserves of gold that were sufficient enough.