Lesson Plan

• Describe how changes in government spending affect aggregate demand and national income.
• Calculate the fiscal multiplier and apply it to given spending changes.
• Evaluate the advantages and disadvantages of using government spending as a fiscal‑policy tool.
• Analyse real‑world examples of expansionary and contractionary spending policies.

• Projector and screen
• Whiteboard and markers
• Printed worksheet with multiplier tables
• Calculators (one per pair)
• Handout of the illustrative example table
• Flowchart diagram of the policy‑decision process

Begin with a brief news clip about a recent government stimulus to capture interest. Ask students to recall the components of aggregate demand and how “G” fits in. Explain that by the end of the lesson they will be able to calculate the fiscal multiplier and evaluate the effectiveness of spending changes.

1. Do‑now (5'): Quick written response – list the four components of AD and identify which one represents government spending.
2. Mini‑lecture (10'): Explain the role of government spending in fiscal policy, introduce the multiplier formula and its variations with taxes.
3. Guided calculation (12'): Work through the expansionary example from the notes, using calculators to compute the multiplier and the resulting change in GDP.
4. Group activity (10'): In pairs, analyse the advantages and disadvantages of increased spending using the provided flowchart; prepare a short justification.
5. Class discussion (8'): Share group findings and connect them to real‑world cases such as the post‑2008 stimulus.
6. Exit ticket (5'): Individually write the multiplier for a given set of MPC and tax rate values and one potential drawback of the policy.

Summarise how government spending influences aggregate demand and the size of the fiscal multiplier. Collect exit tickets to check understanding, and assign homework: research a recent fiscal‑policy decision in any country and write a brief evaluation of its likely multiplier effect and possible limitations.