Lesson Plan

• Describe the components of the savings function (autonomous and induced savings).
• Explain how the marginal propensity to save (MPS) relates to disposable income.
• Derive the total savings equation from the consumption function.
• Analyse the impact of fiscal and monetary policy on autonomous and induced savings.
• Apply the savings function to solve simple macro‑economic problems.

• Projector or interactive whiteboard
• Slide deck with circular‑flow diagram and savings‑function formulas
• Handout worksheet with practice calculations
• Calculator for each student
• Whiteboard and markers
• Sticky notes for exit tickets

Begin with a quick poll: how many of you have a personal savings account and what motivates you to save? Connect this to the idea that part of income is always saved, even when income is zero. Explain that today’s success criteria are to identify autonomous versus induced savings and to use the savings function to predict changes in saving after a policy shift.

1. Do‑now (5'): Students list reasons they might save even without income; share examples.
2. Mini‑lecture (10'): Present the circular‑flow diagram and introduce the savings function S = Sₐ + sY; define each symbol.
3. Guided derivation (10'): Show how the savings function is derived from the consumption function C = Cₐ + cY and work through a numeric example.
4. Group activity (15'): Worksheet – calculate autonomous and induced savings for given Y and s; discuss how fiscal or monetary policy would shift each component.
5. Check for understanding (5'): Quick quiz (clickers or show of hands) on key definitions and the relationship c + s = 1.
6. Summary & transition (5'): Recap main points and preview the next lesson on the investment function.

Summarise that autonomous savings are income‑independent while induced savings vary with disposable income via the MPS. For the exit ticket, ask students to write one way fiscal policy could change induced savings. Homework: complete the worksheet on the savings function and read the textbook section on the consumption‑savings relationship.