Lesson Plan

• Describe the purpose and core objectives of a central bank.
• Explain the main functions and monetary‑policy tools and their effects on money supply and interest rates.
• Analyse the transmission mechanisms through which central‑bank actions affect the real economy.
• Calculate the money multiplier and interpret its significance for credit creation.
• Evaluate the balance between central‑bank independence and accountability.

• Projector and screen for slides/diagrams
• Whiteboard and markers
• Handout summarising central‑bank functions and policy tools
• Calculator or spreadsheet for money‑multiplier exercises
• Sample interest‑rate data set for class activity
• Sticky notes for exit ticket

Imagine a single institution that can influence the price of everything you buy. You already know how government fiscal measures affect the economy, but a central bank operates differently. Today you will learn what a central bank does, the tools it uses, and how those tools reach households and firms. By the end you will be able to explain its role, describe its tools, and evaluate its independence.

1. Do‑now (5') – Students list three ways the government influences the economy; brief discussion of how a central bank differs.
2. Mini‑lecture (10') – Definition of a central bank, its core objectives and main functions (slides with diagram).
3. Tool analysis activity (15') – In groups, examine Open Market Operations, policy rate, and reserve requirements; complete a chart showing impact on money supply (M) and interest rates (i).
4. Money multiplier exercise (10') – Calculate the multiplier for given reserve‑requirement ratios and discuss implications for credit creation.
5. Transmission‑mechanism mapping (10') – Whole‑class construction of a flow diagram covering interest‑rate, exchange‑rate, asset‑price, and credit channels.
6. Independence vs. accountability debate (10') – Two sides argue the need for operational independence and the requirement for transparency; teacher synthesises key points.
7. Quick check (5') – Exit ticket: one sentence describing how a change in the policy rate reaches households.

We have revisited the central bank’s purpose, its tools, and the pathways through which policy shapes the economy. Students write a single takeaway on their sticky note, which serves as the exit ticket. For homework, complete the worksheet on monetary‑policy tools and prepare a short paragraph explaining why central‑bank independence matters for effective policy.