Lesson Plan

• Describe the components of the equation MV = PT and their economic meaning.
• Explain how a change in the money supply influences the price level under the theory’s assumptions.
• Evaluate the key assumptions and limitations of the quantity theory in real‑world contexts.
• Apply the equation to calculate the impact of a money‑supply change on the price level.
• Analyse policy implications of monetary targeting based on the theory.

• Projector and screen
• PowerPoint slides with diagram of M vs P
• Printed handout containing the QTM equation and worksheet
• Calculators for numerical activity
• Whiteboard and markers

Begin with a headline about recent inflation spikes to capture interest. Review students’ prior knowledge of money supply, price level, and basic macro equations. State that by the end of the lesson they will be able to use MV = PT to predict price‑level changes and discuss its policy relevance.

1. Do‑now (5 min): short quiz on money‑supply concepts.
2. Mini‑lecture (10 min): introduce MV = PT, define M, V, P, T, and outline assumptions.
3. Guided derivation (10 min): rearrange to P = MV/T and discuss proportionality.
4. Numerical activity (15 min): students calculate the price‑level effect of a 10 % increase in M using the provided worksheet.
5. Discussion (10 min): explore monetary‑targeting policy, velocity variability, and real‑world criticisms.
6. Check for understanding (5 min): exit‑ticket – one sentence explaining why a stable V is crucial for the theory.

Summarise how the quantity theory links money supply to price level and highlight its assumptions and limits. Collect exit tickets and remind students to complete a homework task: research their country’s current monetary‑targeting framework and write a brief reflection.