Lesson Plan

• Describe the circular flow of income and its relevance to aggregate demand.
• Explain how the Keynesian multiplier is derived from marginal propensities.
• Apply the multiplier formula to calculate the change in national income resulting from a shift in autonomous AD.
• Interpret the magnitude and direction of income changes under different leakage assumptions.

• Projector and screen
• Whiteboard and markers
• Handout with multiplier formulas and worked example
• Calculator or spreadsheet software
• Printed worksheets for practice calculations

Begin with a quick question: What happens to national income when the government increases spending? Review the circular flow model from previous lessons, highlighting how expenditure becomes someone’s income. Explain that today’s success criteria are to correctly compute the income effect of a change in AD using the multiplier.

1. Do‑now (5’) – Students answer a short question on the circular flow on a sticky note; teacher checks responses.
2. Mini‑lecture (10’) – Review AD components and introduce the multiplier concept, deriving k = 1/(1‑MPC) and discussing assumptions.
3. Guided practice (15’) – Walk through the worked example from the notes, filling each step on the board while students follow on their worksheets.
4. Independent activity (15’) – Students receive a new scenario (e.g., change in investment) and calculate ΔY, selecting appropriate propensities and multiplier.
5. Peer review (5’) – Pairs exchange answers, discuss reasoning, and correct any errors.
6. Quick check (5’) – Exit ticket: write the multiplier formula and one condition that would reduce its size.

Summarise that the multiplier translates autonomous spending into larger income changes, contingent on propensities and leakages. Invite a few students to share their exit‑ticket answers and clarify any misconceptions. For homework, assign a set of additional multiplier problems that incorporate taxes and imports.