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Macroeconomic Problems
Lesson Plans
1 x 1 hour lesson dealing with Macroeconomic Problems, which is relevant to the following specifications:
- AQA: Module 2, sections 11.1, 11.2 and 11.3
- Edexcel: Unit 3
- OCR: Unit 2883, sections 5.3.1, 5.3.2 and 5.3.3.
Aim:
To investigate policy solutions to macroeconomic problems.
The intention is to start with a simple model of the business cycle as explained in most textbooks. The activity then builds on this by looking at what standard theory would suggest would be the monetary policy solutions to deal with the problems outlined.
The activity then takes things one step further, introducing the real life dimension into the discussion, by looking at the decision by the ECB to raise interest rates in the eurozone in early December 2005. The intention is to 'throw a spanner into the works' and encourage students to think differently about the problems that face policy makers and to bring in the 'it depends' rule to evaluate policy.
Learning Objectives:
At the end of the session, students will have covered:
- The main phases of the business cycle and the economic conditions that are expected in a boom and a recession
- The appropriate use of interest rates to deal with either problem
- The difficulties of economic policy making
- The importance of 'it depends' and judgment in answering questions on macroeconomic policy
Resources:
Lesson Structure:
- Introduce the topic and explain the outline and aims of the lesson (5 minutes)
- Short question and answer session on the business cycle - get the students to demonstrate their understanding of the business cycle. (10 minutes)
- Divide the space on a whiteboard or similar into two. Students use the cards to identify what economic conditions would be expected in a 'boom' and in a 'recession'. Students place the cards on either side according to what they think shoud occur in a 'recession' and a 'boom'. Discuss why characteristics have been placed where they have. (10 minutes)
- Move the cards to reflect the position in the eurozone - ask students to comment on the likelihood of this and the policy options that are now open to them. (10 minutes)
- Hand out student information sheet - get students to read the article. (5 minutes)
- Discussion on the arguments for and against the ECB raising interest rates (15 minutes)
- Summary and review. (5 minutes)
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