The price-specie-flow mechanism will work only if governments are willing to play by the rules of the game by letting the money stock rise and fall as gold flows in and out.Once the government demonetizes (neutralizes)gold,the mechanism will break down.In addition,the effectiveness of the mechanism depends on

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The price-specie-flow mechanism relies on changes in the price levels of countries to adjust for imbalances in their international trade. Therefore, the price elasticity of demand for imports is crucial in determining how effective this mechanism will be. If demand for imports is highly elastic (responsive to changes in prices), then changes in prices will lead to significant changes in the quantity of imports demanded, facilitating the adjustment process. Conversely, if demand for imports is inelastic, price changes may have little effect on quantities traded, limiting the effectiveness of the price-specie-flow mechanism. The other options (income elasticity of demand for imports, price elasticity of supply of imports, and income elasticity of supply of imports) are also important in determining trade imbalances, but they do not directly affect the effectiveness of the price-specie-flow mechanism.

The Price-Specie-Flow Mechanism Will Work Only If Governments Are Willing