Classical Gold Standard 1875-1914 o Highly stable exchange rates under the classical gold standard provided an environment that was conducive to international trade and investment e Misalignment of exchange rates and international imbalances of payment were automaticall corrected by the price-specie-flow mechanism McGraw-Hilylrwoin 2-6 Copyright@ 2001 by The McGraw-Hill Companies, Inc. All rightsMcGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 2-6 Classical Gold Standard: 1875-1914 ⚫ Highly stable exchange rates under the classical gold standard provided an environment that was conducive to international trade and investment. ⚫ Misalignment of exchange rates and international imbalances of payment were automatically corrected by the price-specie-flow mechanism