Lesson Plan

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Lesson Plan
Grade: Date: 17/01/2026
Subject: Economics
Lesson Topic: reserve ratio and capital ratio
Learning Objective/s:
  • Describe the purpose and calculation of the reserve ratio.
  • Explain how the reserve ratio influences the money multiplier and credit creation.
  • Define the capital ratio and its role in bank solvency.
  • Analyze the impact of capital requirements on lending and financial stability.
  • Compare and contrast reserve and capital ratios in their regulatory contexts.
Materials Needed:
  • Projector and screen for slides
  • Whiteboard and markers
  • Handout with calculation examples of reserve and capital ratios
  • Calculator or spreadsheet software
  • Sample bank balance‑sheet worksheets
  • Summary sheet of Basel III capital requirements
 Introduction:
Begin with a quick poll: how many students have heard of reserve requirements or capital buffers in banks? Review the concept of fractional‑reserve banking from the previous lesson. Explain that today’s success criteria are to calculate both ratios and evaluate their policy implications.
Lesson Structure:
  1. Do‑now (5') – Short quiz on reserve‑ratio basics.
  2. Mini‑lecture (10') – Define reserve ratio, show formula and money‑multiplier effect using the example table.
  3. Guided calculation (10') – Pairs compute the reserve ratio from provided data and discuss policy implications.
  4. Mini‑lecture (10') – Introduce capital ratio, Tier 1 capital, risk‑weighted assets, and Basel III standards.
  5. Guided calculation (10') – Pairs calculate the capital ratio from the second example and interpret results.
  6. Comparison activity (10') – Whole‑class Venn diagram comparing purposes, authorities, and macro impacts of the two ratios.
  7. Check for understanding (5') – Exit ticket: one sentence describing how changing each ratio influences the economy.
Conclusion:
Summarise that reserve ratios manage liquidity while capital ratios safeguard solvency, both shaping credit availability. Ask students to write one key takeaway on a sticky note as an exit ticket. For homework, assign a problem set requiring calculation of both ratios for a hypothetical bank and a brief reflection on policy choices.