In the past two decades there has been a resurgence of interest in providing microeconomic underpinnings to macroeconomic theory. There are several noteworthy examples. Franco Modigliani and Richard Brumberg [11] use the theory of consumer behavior in the development of the "lifecycle" hypothesis of consumption.' Dale Jorgensen [7] uses the theory of the firm in his studies of investment behavior. Robert Lucas and Leonard Rapping [10] use both the theory of the firm and the theory of consumer behavior in the study of unemployment and the labor market. The studies cited above, however, are only concerned with a particular structural equation or set of relations. They do not attempt to provide a complete aggregate theory with internally consistent microfoundations. An attempt at such a theory is made by Don Patinkin [12] in his important contribution, Money, Interest and Prices. However, Patinkin's macrotheory is seriously flawed, because he does not apply the microeconomics of the first part of his book consistently to the construction of his aggregate model. As Robert Clower [5] correctly points out, it is not consistent to have the supply of labor and the real wage rate endogenously determined and then to have income appear as an exogenous variable in the commodity and money demand functions. He states, "My point is that such variables as can be shown to be functionally dependent on others should not then be manipulated independently" [5, 112]. The purpose of this paper is to construct and test a simple comparative statics macro model which, hopefully, avoids this error made by Patinkin. The model will be a threesector, three-good model. The three sectors are households which supply factors of production and demand output, firms which hire factors of production to produce output, and the government which demands output. The three goods are two factors of production (labor services and existing capital) and a single output. The time period in the model is long enough for the markets for each of the three goods to clear, but short enough so that new capital cannot be put in place in the period under consideration. The aggregative structure of the economy is discussed in greater detail in Section I. The behavioral equations of the three sectors are obtained in Section II. In Section III we