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Unemployment, NAIRU and the Phillips Curve - Lesson Plan: 2-3 x 1 hour lessons

A series of 'off the shelf' lesson plans and resources for use in the classroom. These lessons deal with unemployment, NAIRU and the Phillips Curve and are relevant to the following specifications:

  • AQA: Module 6, 15.2
  • Edexcel: Unit 6
  • OCR: Module 2887, 5.7.5

Aim:

The lesson takes a look at the Phillips Curve and attempts to introduce students into some elementary data analysis to arrive at some conclusions about the Phillips Curve and the extent to which inflation and unemployment can be subject to a trade-off.

The Presentation associated with the lesson attempts to make the link between AS/AD analysis and the Phillips Curve by showing how attempts to reduce unemployment by expansionary fiscal policies can lead to shifts in the AS curve to the left and higher inflation, but with the same level of unemployment in the long run. It then shows how this same relationship can be interpreted using the Phillips Curve, albeit building in the rational expectations model.

The Activity then gets students to demonstrate their understanding of this relationship and introduces some data to analyse. Students can use the facilities provided in the Key Economic Data section to copy relevant data and paste it into a spreadsheet such as Excel to construct a chart that will help them with their analysis.

It should be stressed to students that there is no set right answer to this; what they are being encouraged to do is to arrive at some independent conclusions from their analysis. If they arrive at the conclusion that there is not relationship at all - so be it!

The later tasks provide an opportunity to do some evaluation as a result of the analysis and there are a number of suggested links that will provide some further information to help. Some of these links provide materials that are challenging for an A2 student but some useful information can be gleaned from amongst the econometrics.

Learning Objectives:

At the end of the lessons, students should be able to:

  • Understand the relationship between fiscal expansion and short and long run consequences using the AS/AD framework
  • Link the AS/AD framework to the use of the Phillips Curve
  • Select, organise and interpret appropriate data from a range of sources
  • Arrive at judgments based on investigation and research from a range of sources

Resources:

Lesson Structure:

The lessons may cover two or three periods, depending on how detailed the analysis that students engage in is going to be. The structure below assumes three lessons are set aside but this could be squeezed into two.

Lesson 1

  1. Introduce the topic by using the PowerPoint Presentation to look at the theory behind this section. (20 minutes)
  2. Give out the Activity and explain the learning objectives and the process involved. (10 minutes)
  3. Set students on the tasks - these can be carried out individually or in small groups. (25 minutes)
  4. Review the main points of the lesson and outline the process for the next lesson. (5 minutes)

Lesson 2

  1. Remind students of the tasks and the timescale allowed. (5 minutes)
  2. Set students on task. (50 minutes)
  3. Bring students together to outline the plan for the next lesson. (5 minutes)

Lesson 3

  1. Provide a quick overview of what has been covered in the Presentation and the tasks. (5 minutes)
  2. Get students to feedback their analysis and evaluation and discuss the relevance of the Phillips Curve to a modern economy. The emphasis of the discussion is focused on the idea that modern economics has progressed to the extent that 'traditional' textbook explanations of fiscal policy/monetary policy arguments are largely out of date. (45 minutes)
  3. Review the main outcomes of the lessons and the discussion. (10 minutes)