Lesson Plan

• Describe the effect of inflation on the real returns of savers, lenders and borrowers.
• Calculate the real interest rate using the formula r = i − π.
• Analyse how inflation influences borrowing and lending behaviour.
• Evaluate the redistributive implications of inflation for different economic groups.

• Projector and screen
• Whiteboard and markers
• Printed handout with the summary table
• Calculator worksheets for r = i − π
• Current inflation‑rate data charts (digital or printed)

Begin with a quick scenario: a student saved £1,000 last year, but prices have risen by 6 %. Ask how much that money can buy today. Link this to prior knowledge of interest rates and set the success criteria: students will be able to explain and calculate inflation’s impact on savers, lenders and borrowers.

1. Do‑now (5 '): Students compute real interest rates from given nominal rates and inflation figures.
2. Mini‑lecture (10 '): Explain inflation, nominal vs. real rates, and the formula r = i − π.
3. Group analysis (12 '): Teams examine the summary table, discuss impacts on each group, and complete a worksheet.
4. Class discussion (8 '): Groups share insights; teacher highlights the redistributive effects.
5. Case study (10 '): Present a fixed‑rate borrower scenario; students predict outcomes under rising inflation.
6. Exit ticket (5 '): Write one way inflation benefits borrowers and one way it harms savers.

Summarise how inflation changes real returns for savers, lenders and borrowers, reinforcing the formula and its implications. Collect exit tickets to gauge understanding, and assign homework: research the current UK inflation rate and write a short paragraph on how it could affect personal saving and borrowing decisions.