Lesson Plan

• Describe the concepts of average propensity to consume (APC) and marginal propensity to consume (MPC).
• Calculate APC and MPC from given data.
• Analyse how changes in income affect APC and MPC and their implications for aggregate demand.
• Explain the role of APC and MPC in the multiplier effect and fiscal policy.
• Compare the behaviour of APC and MPC across different income levels.

• Projector or interactive whiteboard
• Slide deck with circular‑flow diagram
• Handout containing the numerical example table
• Calculator worksheets
• Whiteboard and markers
• Exit‑ticket slips

Begin with a quick question: “If you receive an extra £10, how much would you spend?” This activates prior knowledge of spending habits. Review the circular‑flow model and link consumption to income. State that by the end of the lesson students will be able to compute and interpret APC and MPC.

1. Do‑now (5') – students answer the opening question individually and share responses.
2. Mini‑lecture (10') – introduce APC and MPC formulas using the circular‑flow diagram.
3. Guided practice (12') – work through the provided numerical example, calculating APC for each income level.
4. Pair activity (10') – students compute MPC from a new data set and discuss why it remains stable.
5. Conceptual discussion (8') – explore implications for the multiplier and policy, referencing real‑world examples.
6. Check for understanding (5') – quick quiz via Kahoot or hand‑raised responses.

Summarise that APC shows the average share of income spent while MPC shows the extra spending from an additional unit of income, both influencing the multiplier. Ask students to write one real‑world example of a policy that would be affected by MPC on an exit ticket. Assign homework to complete a worksheet calculating APC and MPC for a different set of incomes.