An analysis of a rural-urban sector model for developing countries
was conducted to determine the effects of consumer goods rationing
onlabor supply. The two sector model was also used to observe the
effects of fiscal policy and exchange rate policy on the production of
agricultural and urban goods. The results revealed that increases in
government spending and exchange rate devaluation would adversely affect
agricultural production. In addition, the results determined that
rationing of imported consumer goods could lead to trade imbalances.