| Lesson Plan |
| Grade: |
Date: 25/02/2026 |
| Subject: Economics |
| Lesson Topic: components of Aggregate Demand (AD) and their determinants: consumption function: autonomous and induced consumer expenditure |
Learning Objective/s:
- Describe the four components of Aggregate Demand and the key determinants of each.
- Explain the consumption function and differentiate autonomous from induced consumption.
- Apply the consumption function to evaluate how changes in income, wealth, or interest rates affect consumption.
- Evaluate policy measures (tax cuts, transfers, interest‑rate changes) and predict their impact on autonomous and induced consumption.
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Materials Needed:
- Projector and screen
- Whiteboard and markers
- Printed handout of the circular‑flow diagram
- Worksheet with consumption‑function exercises
- Calculators
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Introduction:
Begin with a quick discussion of students’ recent spending choices to hook interest. Review the previous lesson on the circular flow of income and the AD equation as a bridge to today’s focus. State the success criteria: students will identify autonomous and induced consumption and predict how policy changes shift each component.
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Lesson Structure:
- Do‑now (5'): List personal purchases from the past week and classify as necessities or discretionary – checks prior knowledge of consumption.
- Mini‑lecture (10'): Review AD components, introduce the consumption function C = a + bYd, and explain autonomous (a) vs induced (bYd) expenditure using the projector.
- Guided practice (12'): Solve a sample problem calculating C given Yd, a, and b; discuss how wealth or interest‑rate changes shift a or b. Students complete worksheet in pairs.
- Policy analysis activity (10'): Groups evaluate a policy (e.g., tax cut vs stimulus payment) and predict its effect on autonomous and induced consumption; each group presents a brief rationale.
- Check for understanding (5'): Exit‑ticket quiz with two short questions – define autonomous consumption and state the effect of lower interest rates on the MPC.
- Summary & homework (3'): Recap key points; assign homework to graph the consumption function for two different values of a and explain the shift.
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Conclusion:
Recap the distinction between autonomous and induced consumption and how each responds to policy tools. Collect the exit‑ticket to gauge immediate understanding, and remind students of the homework graphing task to reinforce learning. Encourage them to think of real‑world examples of autonomous spending before the next class.
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