Lesson Plan

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Lesson Plan
Grade: Date: 17/01/2026
Subject: Economics
Lesson Topic: Monetary policy measures: changes in interest rate
Learning Objective/s:
  • Define monetary policy and the central bank’s role.
  • Explain how a change in the policy interest rate is implemented and transmitted through the economy.
  • Analyse the impact of interest‑rate changes on aggregate demand, inflation, unemployment and exchange rates.
  • Evaluate the advantages and limitations of using interest‑rate policy.
Materials Needed:
  • Projector and screen
  • PowerPoint slides summarising the transmission mechanism
  • Printed worksheet with diagram and exam‑style question
  • Whiteboard and markers
  • Calculator for each student
 Introduction:
Imagine the central bank suddenly raises the interest rate – what happens to the price of a loaf of bread? Students should already know basic supply‑demand and the role of banks in the economy. By the end of the lesson they will be able to trace the interest‑rate transmission mechanism and assess its macro‑economic effects.
Lesson Structure:
  1. Do‑now (5'): quick quiz on monetary‑policy definitions.
  2. Mini‑lecture (10'): introduce the policy (repo) rate and how the central bank implements changes.
  3. Interactive diagram activity (12'): groups label the transmission flow on a worksheet.
  4. Case‑study analysis (10'): examine the impact table for rate increases vs. decreases and discuss.
  5. Exam‑question practice (8'): answer the sample question, then peer‑check using the mark scheme.
  6. Plenary (5'): recap key points and exit ticket – write one advantage or limitation of interest‑rate policy.
Conclusion:
We summarised how changes in the policy rate move through borrowing, investment, exchange rates and aggregate demand. Students submit their exit‑ticket statements, demonstrating a clear understanding of one policy advantage or drawback. For homework, they research a recent central‑bank decision and prepare a short paragraph predicting its likely macro‑economic effects.