Lesson Plan

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Lesson Plan
Grade: Date: 25/02/2026
Subject: Economics
Lesson Topic: the effects of changing exchange rates on the external economy using Marshall-Lerner and J curve analysis
Learning Objective/s:
  • Describe the difference between nominal and real exchange rates and the concepts of depreciation and appreciation.
  • Explain the Marshall‑Lerner condition and its implication for the trade balance after a depreciation.
  • Analyse the short‑run J‑curve effect and the adjustment process of export and import quantities.
  • Apply the step‑by‑step analysis to evaluate how a change in exchange rate impacts the external economy.
  • Evaluate policy measures that can influence the speed of adjustment.
Materials Needed:
  • Projector and screen for slides/diagrams.
  • Whiteboard and markers.
  • Handout summarising Marshall‑Lerner condition and J‑curve diagram.
  • Graph paper or digital graphing tool for students to sketch the J‑curve.
  • Calculator for elasticity calculations.
  • Worksheets with practice questions.
 Introduction:
Begin with a quick poll: “If the pound fell against the dollar, what would happen to the price of imported smartphones?” Students recall nominal vs real exchange rates and discuss expectations. Explain that today they will determine whether a depreciation improves the trade balance using the Marshall‑Lerner condition and trace the short‑run J‑curve. Success will be shown by correctly interpreting a trade‑balance diagram and justifying policy recommendations.
Lesson Structure:
  1. Do‑now (5’) – Students answer the poll question on sticky notes; teacher collects responses to gauge prior knowledge.
  2. Mini‑lecture (10’) – Review nominal/real exchange rates, depreciation/appreciation, and introduce the Marshall‑Lerner condition with formula.
  3. Interactive diagram (10’) – Project a J‑curve graph; students label the short‑run trough and long‑run improvement and discuss the reasons.
  4. Group activity (15’) – In small groups, use provided data to calculate export and import elasticities, determine if the condition holds, and predict the trade‑balance outcome.
  5. Whole‑class debrief (10’) – Groups present findings; teacher clarifies misconceptions and links to policy implications.
  6. Exit ticket (5’) – Each student writes one sentence summarising how a depreciation affects the external economy in the short and long run.
Conclusion:
We revisited how exchange‑rate movements influence prices, quantities and the trade balance, confirming that the Marshall‑Lerner condition predicts a long‑run improvement while the J‑curve explains the initial dip. Your exit‑ticket responses show you can distinguish short‑run and long‑run effects. For homework, complete the worksheet that asks you to evaluate a real‑world depreciation scenario and propose a suitable policy response.