Under the gold standard system, gold can be imported and exported freely. If a country's trade deficit leads to gold outflow, the country's money supply will decrease, prices will decrease, exports will increase, imports will decrease, and the trade deficit will be improved. On the contrary, if a country has a trade surplus, which leads to the inflow of gold, the country's money supply will increase, prices will rise, exports will decrease, imports will increase, and the trade surplus will be improved.

2. The automatic adjustment mechanism of balance of payments under the fixed exchange rate of paper currency standard.

A. Interest rate effect

B. Actual balance effect

C. Relative price effect

3. Automatic adjustment mechanism of balance of payments under floating exchange rate.

Under the floating exchange rate, the government does not adjust the exchange rate. There is a trade deficit, foreign exchange demand rises, local currency demand falls, foreign exchange rate rises, and local currency depreciates. According to the elasticity theory, when the Marshall-Lerner condition is met, the trade situation is improved.