Lesson Plan

• Describe the purpose and key objectives of monetary policy.
• Explain how OMO, reserve‑ratio changes, discount‑rate adjustments and quantitative easing influence the money supply, interest rates and aggregate demand.
• Apply the money‑multiplier formula to estimate the potential change in total money supply.
• Outline the transmission mechanism from a central‑bank action to its macro‑economic impact.
• Evaluate when expansionary or contractionary policy is appropriate and recognise common limitations.

• Projector and screen
• Whiteboard and markers
• Printed worksheet with instrument table and multiplier exercise
• Calculator for each student
• Handout of LM‑curve shift diagram
• Interactive quiz platform (e.g., Kahoot)

Begin with a brief news clip on a recent central‑bank rate decision to hook interest. Ask students what they already know about how a central bank can influence the economy. Explain that by the end of the lesson they will be able to identify the main tools, calculate their impact on the money supply and evaluate appropriate policy stances.

1. Do‑Now (5'): Quick recall quiz on the objectives of monetary policy (Kahoot).
2. Mini‑lecture (10'): Overview of the four main instruments and their typical actions.
3. Guided practice (12'): Work through the instrument table, students fill in effects on money supply, interest rates and AD.
4. Money‑multiplier activity (10'): Calculate the change in money supply for a given reserve‑ratio scenario using calculators.
5. Transmission mechanism simulation (10'): Role‑play where groups act as central bank, interbank market, commercial banks, and consumers to trace the steps.
6. Case‑study discussion (8'): Analyse a recent expansionary or contractionary policy and identify limitations.
7. Exit ticket (5'): One‑sentence summary of when each tool is most appropriate.

Recap the key links between instruments, the money multiplier and the transmission mechanism. Collect the exit tickets to gauge understanding, then assign a short homework: each student finds a current monetary‑policy announcement and writes a paragraph explaining which tool was used and why.