Lesson Plan

• Define money supply and differentiate between M₀, M₁ and M₂.
• Explain the purpose and objectives of monetary policy.
• Identify the four main instruments of monetary policy and describe how each works.
• Analyse the short‑run effects of expansionary and contractionary monetary policy on inflation, output and employment.

• Projector and screen
• Slide deck with definitions and tables
• Printed handout of the money‑supply table (M0, M1, M2)
• Worksheet with policy‑instrument matching activity
• Case‑study cards illustrating expansionary and contractionary scenarios
• Diagram of the money market (digital or printed)
• Whiteboard and markers

Begin with a quick question: “If everyone suddenly received extra cash, what might happen to prices and jobs?” Connect this to students’ prior knowledge of macro‑economic goals (price stability, growth, employment). Explain that today they will learn the key terms and tools that central banks use to manage exactly these outcomes. Success will be measured by their ability to define terms, list instruments, and explain impacts.

1. Do‑now (5') – short quiz on macro‑economic objectives to activate prior knowledge.
2. Mini‑lecture (10') – present definitions of money supply (M0, M1, M2) and monetary policy using slides.
3. Instrument matching activity (10') – students work in pairs to match each policy tool to its function; discuss answers.
4. Case‑study analysis (15') – groups examine an expansionary policy scenario, fill a cause‑effect chart, then repeat with a contractionary scenario.
5. Diagram demonstration (5') – show the money‑market diagram shifting right for expansionary policy; highlight interest‑rate changes.
6. Check for understanding (5') – exit‑ticket question: “Name one instrument and describe how it would affect inflation.”

Summarise how the money supply, policy instruments, and their effects interrelate, reinforcing the link to macro‑economic goals. Collect exit tickets to gauge understanding, and assign a brief homework: research a recent central‑bank decision and write a 150‑word summary of its intended impact.