Lesson Plan

• Describe how domestic inflation influences the balance of payments through export competitiveness, import demand, and capital flows.
• Explain how balance of payments deficits can generate inflationary pressures via exchange‑rate depreciation, import‑price rises, and monetary financing.
• Apply the real exchange‑rate formula to analyse the impact of price changes on trade balances.
• Evaluate policy options to break the inflation‑BoP feedback loop.

• Projector and laptop
• Whiteboard and markers
• Printed handout with the inter‑relationship diagram
• Worksheet containing a case‑study country data
• Calculators
• Exit‑ticket slips

Start with a quick poll: which recent news story links rising prices to a country’s trade balance? Review students’ prior knowledge of inflation and the balance of payments. State the success criteria: students will trace causal links between inflation and BoP and propose appropriate policy responses.

1. Do‑now (5’): Short written question on how inflation can affect export competitiveness.
2. Mini‑lecture (10’): Review key concepts and the real exchange‑rate formula using the projector.
3. Guided analysis (15’): Annotate a flow‑chart diagram showing inflation → real exchange rate → BoP impacts.
4. Case‑study activity (15’): In pairs, examine a country’s recent BoP deficit, identify inflationary channels, and complete the worksheet.
5. Whole‑class discussion (10’): Share findings and link to possible policy responses.
6. Formative check (5’): Exit ticket – one sentence explaining how a BoP deficit can cause inflation.

Recap the two‑way links between inflation and the balance of payments and highlight the key policy tools discussed. Collect exit tickets to gauge understanding, and assign a homework task: write a brief paragraph evaluating a real‑world example of the inflation‑BoP relationship.