Lesson Plan

• Describe the four main categories of government expenditure (current, capital, transfer payments, interest).
• Explain the economic reasons for government spending, including provision of public goods, redistribution, stabilisation, growth and political motives.
• Analyse short‑run and long‑run effects of each spending type on aggregate demand, inflation, debt and productivity.
• Apply the fiscal multiplier concept to evaluate how changes in spending influence overall output.

• Projector and screen
• Whiteboard and markers
• Printed handout summarising spending categories
• Worksheet with a table for reasons/effects
• Calculators

Begin by asking students to list services they think their taxes fund, linking to prior knowledge of public goods and basic fiscal policy. Explain that today they will explore why governments spend in particular ways and what impact that has on the economy. Success will be measured by their ability to categorise spending, explain the underlying reasons and predict the likely macro‑economic effects.

1. Do‑now (5'): Students create a quick mind‑map of services they receive from government.
2. Mini‑lecture (10'): Present the four spending categories with real‑world examples using slides.
3. Guided analysis (12'): In pairs, fill a table linking each spending type to its primary reasons and typical economic effects.
4. Whole‑class discussion (8'): Share tables, introduce the fiscal multiplier formula and discuss its relevance.
5. Application activity (10'): Calculate the impact of a £1 billion increase in capital expenditure using a given MPC.
6. Check for understanding (5'): Exit ticket – one sentence summarising the main effect of transfer payments.

Recap the four spending categories, their reasons and the short‑run vs long‑run effects discussed. Collect exit tickets and highlight any misconceptions. For homework, assign a brief essay analysing how political objectives can shape fiscal decisions and affect economic outcomes.