Lesson Plan

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Lesson Plan
Grade: Year 12 Date: 17/01/2026
Subject: Economics
Lesson Topic: positive and negative output gaps
Learning Objective/s:
  • Describe the concept of an output gap and differentiate between positive (inflationary) and negative (recessionary) gaps.
  • Explain how the production‑function and statistical‑trend methods estimate potential output.
  • Analyse the macroeconomic implications of each gap type for inflation, unemployment and sustainability.
  • Evaluate appropriate fiscal and monetary policy responses to close the gap.
  • Apply the neutral output‑gap principle to assess policy proposals for sustainable growth.
Materials Needed:
  • Projector and screen for slides/diagrams
  • Whiteboard and markers
  • Handout summarising definitions, tables and policy tools
  • Calculator or spreadsheet for simple gap calculations
  • Sample AD‑AS diagram (printed or digital)
 Introduction:

Begin with a quick poll: “If the economy is growing faster than its capacity, what might happen to prices?” Connect responses to prior knowledge of inflation and unemployment. Explain that today’s success criteria are to identify output‑gap types, calculate a simple gap, and recommend a policy response.
Lesson Structure:
  1. Do‑now (5’) – Worksheet where students label scenarios as positive or negative output gaps.
  2. Mini‑lecture (10’) – Define output gap, present the formula, and display an AD‑AS diagram illustrating both gaps.
  3. Method exploration (12’) – Compare production‑function and statistical‑trend approaches; pairs calculate a basic gap using provided GDP data.
  4. Implications discussion (10’) – Groups discuss how each gap affects inflation, unemployment and sustainability; share key points.
  5. Policy response activity (10’) – Role‑play: each group proposes fiscal and monetary measures for a given gap scenario; teacher provides feedback.
  6. Formative check (8’) – Exit ticket: write one sentence defining a neutral output gap and one policy recommendation to achieve it.
Conclusion:

Recap the definition of a neutral output gap and why it matters for sustainable growth. Collect exit tickets to gauge understanding and assign a short homework: analyse a recent news article for evidence of an output gap and suggest an appropriate policy response.