Lesson Plan

• Define the multiplier and explain its economic significance.
• Derive the simple expenditure multiplier formula using the consumption function.
• Calculate the multiplier in closed and open economies, incorporating MPC, MPS, tax rate, and import propensity.
• Analyse how changes in autonomous expenditure affect equilibrium national income.
• Evaluate the policy implications of the multiplier for fiscal decisions.

• Projector and screen
• Whiteboard and markers
• Printed worksheets with multiplier exercises
• Scientific calculators
• Handout of the circular‑flow diagram
• PowerPoint slides covering definitions and derivations

Begin with a quick poll: “What happens to the economy when the government spends an extra £1 million?” Connect this to students’ prior knowledge of the circular‑flow model and marginal propensity to consume. Explain that today’s success criteria are to define the multiplier, derive its formula, and apply it to both closed and open economies.

1. Do‑now (5'): Students answer recall questions on the circular flow and MPC on the board.
2. Mini‑lecture (10'): Define the multiplier, present the formula k = 1/(1‑c), and illustrate with a simple diagram.
3. Guided practice (12'): Work through a closed‑economy example calculating k = 1/(1‑c) and ΔY = k·ΔI.
4. Group activity (15'): In small groups, use the open‑economy formula k = 1/[1‑c(1‑t)+m] to calculate the multiplier for a £100 m government‑spending increase (MPC = 0.75, tax = 0.20, import propensity = 0.10).
5. Check for understanding (8'): Exit ticket – write one sentence explaining why a higher MPC yields a larger multiplier.
6. Summary (5'): Teacher revisits the four key points and answers any lingering questions.

Recap the definition, derivation, and calculation steps for both closed and open economies. Collect exit tickets to gauge understanding, and assign homework: complete the remaining worksheet problems and research a real‑world fiscal stimulus where the multiplier was discussed.