Lesson Plan

• Describe the definition of fiscal policy and its purpose.
• Explain how government spending and taxation influence aggregate demand.
• Identify the main expansionary and contractionary fiscal‑policy instruments.
• Analyse the key limitations that restrict fiscal policy effectiveness.

• Projector and screen
• Whiteboard and markers
• Printed handout with AD‑AS diagram
• Worksheet containing the AD equation and instrument table
• Calculator for quick calculations
• PowerPoint slides summarising key concepts

Begin with a brief news clip about a recent government stimulus package to hook interest. Ask students what they already know about how government actions can affect the economy, linking to prior lessons on aggregate demand. State that by the end of the lesson they will be able to define fiscal policy, explain its mechanisms, and evaluate its limits.

1. Do‑now (5'): Quick quiz on components of aggregate demand (G, C, I, T).
2. Mini‑lecture (10'): Define fiscal policy, present its objectives and the AD equation.
3. Guided practice (8'): Work through a numerical example showing how a change in G or T shifts AD.
4. Group activity (12'): Analyse case studies of expansionary vs. contractionary policy; fill in a table of instruments and expected effects.
5. Whole‑class discussion (8'): Discuss limitations – time lags, political constraints, crowding‑out, external impacts.
6. Exit ticket (5'): Write one sentence summarising when expansionary policy is appropriate.

Summarise the definition, the key instruments, and the main limitations of fiscal policy. Collect exit tickets to gauge understanding and assign a short homework: research a current fiscal policy measure in their country and explain its intended impact on AD.