ABSTRACT
This chapter examines the determination of effective supplies and demands and analyzes their implications for the determination of output, employment, and resource flow under non-market-clearing conditions. A basic assumption in the model is that the economy can be specified completely at any instant in terms of its prices, the combination of real wage and real resource flow price. The basic model determines the quantities of the economic goods and their exchange ratios by analyzing the relationships between the exogenous variables of the model and the values of endogenous variables which satisfy the market-clearing conditions. The nature of the fix-price equilibrium will play an important role in the analysis of impacts of policy measures or of exogenous disturbances. The existence of non-market-clearing trading in the third market can change some policy recommendations, since the behaviour of the system is affected by non-market-clearing in the resource flow market.
