Lesson Plan

• Describe how banks create money through the fractional‑reserve lending process.
• Compare the features, purposes and risks of overdrafts and term loans.
• Explain the steps of the bank lending process and how interest rates are determined.
• Analyse the impact of bank lending on the money supply and monetary policy.

• Projector or interactive whiteboard
• PowerPoint slides summarising key concepts
• Handout with a comparison table of overdrafts vs. term loans
• Worksheet for the lending‑process activity
• Calculator for reserve‑ratio calculations
• Exit‑ticket slips

Begin with a quick poll: “If you needed cash today, would you prefer an overdraft or a loan?” Use responses to link prior knowledge of borrowing to today’s focus. Explain that by the end of the lesson students will be able to identify how each product works, how banks profit, and why it matters for the economy.

1. Do‑Now (5'): Students list advantages/disadvantages of overdrafts vs. loans on sticky notes.
2. Mini‑lecture (10'): Explain fractional‑reserve banking and the money multiplier (formula).
3. Interactive comparison (10'): Use the handout table; students fill in missing features and discuss as a class.
4. Process flow activity (15'): In pairs, students map the five‑step lending process on a worksheet, then present one step.
5. Interest‑rate case study (10'): Calculate sample interest for an overdraft and a term loan using given rates.
6. Check for Understanding (5'): Quick quiz via Kahoot or show of hands on key concepts.

Recap the main differences between overdrafts and term loans and their effects on money creation. Students complete an exit ticket stating one way banks’ lending decisions influence the broader economy. Assign a short homework: research a recent change in the central bank’s base rate and predict its impact on loan demand.