Lesson Plan

• Describe the difference between actual and potential economic growth and how the output gap is measured.
• Explain the determinants of potential growth and the factors that cause actual growth to diverge from potential growth.
• Analyse the sustainability implications of positive and negative output gaps.
• Apply a simple production‑function framework to evaluate how changes in factor productivity affect potential growth.
• Evaluate policy options for closing output gaps while maintaining long‑run sustainability.

• Projector and screen
• Whiteboard and markers
• Printed handout with comparative table (actual vs potential growth)
• Worksheet for diagram sketching
• Calculators (or laptops with spreadsheet software)
• Exit‑ticket cards or digital quiz platform

Begin with a quick headline about a recent economy experiencing a rapid GDP surge and ask students what “growth” really means. Recall that they already know how to calculate a simple growth rate from last week’s data. State that by the end of the lesson they will be able to distinguish actual from potential growth, interpret output gaps, and judge whether growth is sustainable.

1. Do‑now (5') – Students compute an actual growth rate from a two‑year GDP table displayed on the board.
2. Mini‑lecture (10') – Define actual and potential growth, introduce the output‑gap formula, and link to sustainability.
3. Comparative‑table activity (12') – In pairs, complete a printed table contrasting definitions, determinants, and implications; discuss answers.
4. Diagram construction (10') – Students sketch the LRAS, SRAS and AD curves, label the output gap, and annotate sustainability concerns.
5. Case‑study analysis (10') – Examine a short news excerpt on a country with a positive/negative gap; identify causes and suggest two policy responses.
6. Formative check (5') – Quick Kahoot/exit‑ticket quiz covering the five key objectives.

Summarise how actual growth reflects short‑run performance while potential growth sets the sustainable ceiling, and why keeping the output gap small matters for inflation and employment. Collect exit tickets asking students to state one policy that can close a negative gap without harming long‑run growth. Assign homework: a short written response analysing the output gap of a chosen economy using the concepts learned.