Lesson Plan

• Describe why governments adjust taxes (stabilisation, redistribution, efficiency, revenue).
• Explain how tax changes affect consumption, investment and aggregate demand.
• Calculate the tax multiplier and interpret its negative sign.
• Analyse short‑run and long‑run impacts of tax increases and cuts on output, unemployment and government revenue.
• Evaluate potential unintended consequences such as time lags, crowding‑out and equity issues.

• Projector and screen for slides/diagrams
• Whiteboard and markers
• Handout summarising the tax multiplier and AD‑AS diagram
• Calculator worksheets for multiplier calculations
• Recent news articles on tax cuts or increases (print or digital)

Begin with a quick poll: “If the government lowered income tax next month, how would you spend the extra money?” Use responses to link prior knowledge of disposable income to today’s focus. State that by the end of the lesson students will be able to predict and evaluate the macro‑economic effects of tax changes.

1. Do‑now (5'): Students complete a short worksheet calculating disposable income before and after a tax change.
2. Mini‑lecture (10'): Present reasons for tax changes and introduce the tax multiplier formula.
3. Guided practice (15'): Work through a sample tax‑cut scenario using the AD‑AS model; students annotate the diagram on their handouts.
4. Group activity (10'): Teams analyse a real‑world news article (e.g., UK income‑tax cut) and identify short‑run and long‑run effects.
5. Check for understanding (5'): Quick quiz using Kahoot or exit‑ticket questions on multiplier sign and impact on consumption/investment.

Summarise how tax adjustments ripple through disposable income, consumption, investment and aggregate demand, reinforcing the negative tax multiplier. Ask each student to write one “key takeaway” on a sticky note as an exit ticket. For homework, assign a brief essay comparing a recent tax increase and a tax cut in different countries, focusing on intended and unintended outcomes.