Cambridge International Examinations

Cambridge International General Certificate of Secondary Education

ECONOMICS 0455/12
Paper 1 Multiple Choice February/March 2016
45 minutes
Additional Materials: Multiple Choice Answer Sheet
Soft clean eraser
*4330295432*

Soft pencil (type B or HB is recommended)

READ THESE INSTRUCTIONS FIRST

Write in soft pencil.

Do not use staples, paper clips, glue or correction fluid.
Write your name, Centre number and candidate number on the Answer Sheet in the spaces provided
unless this has been done for you.
DO NOT WRITE IN ANY BARCODES.

bestexamhelp.com
There are thirty questions on this paper. Answer all questions. For each question there are four possible
answers A, B, C and D.
Choose the one you consider correct and record your choice in soft pencil on the separate Answer Sheet.

Read the instructions on the Answer Sheet very carefully.

Each correct answer will score one mark. A mark will not be deducted for a wrong answer.
Any rough working should be done in this booklet.

This document consists of 10 printed pages and 2 blank pages.

IB16 03_0455_12/3RP
© UCLES 2016 [Turn over
 2

1 An economy with few resources is encouraged to improve the quality of its human resources.

Which policy will lead to such an improvement?

A conserving and protecting more of its natural resources

B limiting the immigration of skilled labour
C providing more opportunities for education and training
D reducing the use of machines in production

2 The diagram shows a country’s production possibility curve for rice and wheat.

P
rice

Q R S

O wheat

A major flood destroys a large area of agricultural land.

Which movement could represent the resulting change in output?

A P to Q B Q to R C R to S D S to P

3 A country raises the school leaving age from 15 to 17 years.

What is the opportunity cost of this increased period of school education to the young people
affected?

A costs of training and employing more teachers

B financial help necessary for school leavers who go to university
C government expenditure on building extra classrooms
D lost income from paid employment because of school attendance

4 In a market there is a shortage of a good.

What change would cause the market to come to an equilibrium?

A a decrease in supply
B a fall in price
C an increase in demand
D a rise in price

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5 A product has a totally inelastic price elasticity of demand.

What will happen to total revenue if the price of the product falls by 25%?

A It will fall by 25%.

B It will fall to zero.
C It will remain unchanged.
D It will rise by 25%.

6 In 2014, a plan for a major new rail link funded by central and regional government was
announced. It would involve the redevelopment of a city area, generate 14 000 jobs and allow the
development of 2000 homes and offices for private businesses.

What economic concepts are indicated directly in the above statement?

A budget surplus and inflation

B factors of production and multinational companies
C fiscal policy and mixed economy
D regional unemployment and average wage rates

7 How are social costs calculated?

A fixed costs plus variable costs

B private benefits less private costs

C private costs plus external costs
D social benefits less external costs

8 What is a disadvantage for a trade union representing workers in a company that has increased
specialisation?

A Capital equipment can be substituted for labour.

B Different abilities can be used fully.
C Production levels are decreased.
D Workers are able to gain a higher level of skill.

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9 A government finance minister said that the purchasing power of most people’s incomes had
risen in the last year.

What must have increased for the purchasing power to rise?

A money wages
B net income after tax
C real wages
D wage rates

10 The table shows the change in incomes for a number of occupations between 2003 and 2013.

change in
occupation income
%

builders 80
plumbers 60
electricians 50
police officers 12
teachers 10
nurses –5

What can be concluded from the table?

A All occupations were better off in 2013 than in 2003.

B Builders earned the highest income in 2013.
C Electricians earned 40% more than teachers in 2013.
D Non-manual workers had lower percentage increases in income than manual workers.

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11 The table shows information for two workers.

doctor window cleaner

annual income ($) 60 000 24 000

total deductions ($) 10 000 8 000

Both workers save 10% of their disposable income.

How much is this in each case?

doctor window cleaner

A $1 000 $800
B $5 000 $1 600
C $6 000 $2 400
D $50 000 $16 000

12 What is most likely to increase a firm’s profits?

A government controls on its prices

B grants for the purchase of new machines
C an increase in the wages paid to its workers
D rising costs of its raw materials

13 Sohrab bought shares in a French telecommunications company operating in many countries.

Joel owns and runs a mobile telephone accessories and repair shop.

What is not identified above?

A multinational company
B partnership
C public company
D sole proprietor

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14 A firm’s average revenue is $20. It sells 1000 units.

What is the firm’s total revenue and the price of the product?

total revenue price

($) ($)

A 20 20
B 1 000 500
C 20 000 20
D 20 000 500

15 The table shows the daily output and costs of four firms making chairs.

Which firm has the highest average cost of production?

fixed costs variable costs

output (units)
($) ($)

A 6 100 140
B 9 30 150
C 12 200 160
D 15 120 330

16 Other things being equal, what is likely to decrease public spending?

A an increase in the age of retirement

B an increase in the birth rate
C an increase in the school-leaving age
D an increase in unemployment

17 When is a tax regressive?

A when some goods have a lower tax than others

B when the tax as a proportion of income decreases as income increases
C when the tax is linked to the rate of inflation
D when the tax is on incomes rather than on goods or services

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18 The Government of India wishes to help the very poorest people.

Which policy would be most likely to achieve this?

A lowering capital gains tax

B lowering housing subsidies
C lowering indirect taxation
D lowering inheritance tax

19 Suppose the Indian Government raises the rate of interest.

What is likely to be the direct effect on the economy?

A It will raise any deficit on the current account.

B It will raise the economic growth rate.
C It will raise the foreign exchange rate.
D It will raise the inflation rate.

20 What is involved in the construction of a retail price index?

A a basket of goods
B average incomes
C economic growth rate
D income tax rate

21 What identifies a recession?

A a fall in the general price level

B a fall in the level of national output
C a fall in the real value of money
D a fall in the stock market index

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22 The table shows the percentage changes in earnings and consumer prices for four countries for
one year.

Which country is likely to have experienced the greatest increase in real income during the year?

country earnings consumer prices

A France +6.5 +3.5

B Germany +4.0 +4.0
C Japan +4.0 –1.0
D UK +6.5 –2.0

23 In the US Consumer Price Index (CPI), food has a weighting of 13.7%. In India food has a
weighting of 46.2% in the CPI.

What can be concluded from this?

A Consumers in India spend more on food than US consumers.

B Food is a bigger proportion of consumer spending in India than in the US.
C The farming sector’s output of food is higher in India than in the US.
D The price of food is rising more rapidly in India than in the US.

24 In many developing economies there is a high rate of population growth.

What is a cause of this?

A Jobseekers migrate from rural to urban centres.

B Poor people have many children to provide labour on family farms.
C There is increased resistance to life saving drugs.
D There is not enough clean water.

25 A country has a birth rate of 30 per 1000 and a death rate of 35 per 1000 and no migration.

What is most likely to cause the population to fall?

A The birth rate decreases and the death rate increases.

B The birth rate increases and the death rate remains the same.
C The birth rate remains constant and the death rate decreases.
D The increase in the birth rate is greater than the increase in the death rate.

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26 The diagram shows the different age distribution of the population in three areas of the world.

%
69.6
65.6
60.7
area X
area Y
35.1
area Z
21.5
18.1
12.9 12.3
4.2

under 15 15-64 over 64

Other things being equal, what can be deduced from the diagram?

A X has the highest dependency ratio.

B Y has the largest working population.
C Y spends most on schools.
D Z spends most on pensions.

27 What is likely to cause a rise in a country’s foreign exchange rate?

A a fall in its exports of goods and services

B a fall in its imports of goods and services

C a fall in its inflow of income
D a rise in its outflow of transfers

28 Drinks producers in India are resisting plans to remove tariffs on imported drinks. They claim that
a reduction in tariffs would destroy the emerging drinks industry with large-scale imports of cheap
drinks.

Which argument for protectionism are they putting forward?

A the declining industry argument

B the infant industry argument
C the strategic industry argument
D the sunset industry argument

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29 Who is most likely to benefit if India bans all steel imports?

A buyers of steel in India

B foreign steel producers
C Indian firms buying steel
D Indian firms selling steel at home

30 What is certain to encourage a higher level of international trade?

A conservation of resources and unstable exchange rates

B exploitation of resources and wider use of quotas
C increased support for home industries and increased tariffs
D more specialisation and falling transport costs

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BLANK PAGE

© UCLES 2016 0455/12/F/M/16

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BLANK PAGE

Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
International Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cie.org.uk after the live examination series.

Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local
Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.

© UCLES 2016 0455/12/F/M/16

 Cambridge IGCSE™

ECONOMICS 0455/12
Paper 1 Multiple Choice February/March 2025
45 minutes

You must answer on the multiple choice answer sheet.

*9601869705*

You will need: Multiple choice answer sheet

Soft clean eraser
Soft pencil (type B or HB is recommended)

INSTRUCTIONS
 There are thirty questions on this paper. Answer all questions.
 For each question there are four possible answers A, B, C and D. Choose the one you consider correct
and record your choice in soft pencil on the multiple choice answer sheet.
 Follow the instructions on the multiple choice answer sheet.
 Write in soft pencil.
 Write your name, centre number and candidate number on the multiple choice answer sheet in the
spaces provided unless this has been done for you.
 Do not use correction fluid.
 Do not write on any bar codes.
 You may use a calculator.

INFORMATION
 The total mark for this paper is 30.
 Each correct answer will score one mark.
 Any rough working should be done on this question paper.

This document has 12 pages. Any blank pages are indicated.

03_0455_12_2025_1.12c
© UCLES 2025 [Turn over
 2

1 What is classed as the factor of production land?

A an airport
B a car park
C a doctor’s office
D a forest

2 An economics graduate chooses to work in a bank rather than teach economics which was the
next best alternative.

Which cost is incurred as a result of this decision?

A external cost
B internal cost
C opportunity cost
D private cost

3 The diagram shows an initial production possibility curve of PPC1.

consumer
goods

PPC2 PPC1
O capital goods

What is likely to have caused the movement of the production possibility curve PPC1 to PPC2?

A a decline in non-renewable resources

B a decline in the opportunity cost of consumer goods
C an increase in investment
D an increase in unemployment

© UCLES 2025 03_0455_12_2025_1.12

 3

4 What is an example of microeconomics?

A a fall in the cost of growing wheat

B a fall in the unemployment rate
C an increase in the rate of inflation
D an increase in government spending

5 There are three key questions to be decided in determining resource allocation within an economy.

What does not relate to one of the choices in the three key questions?

A whether all income groups receive the output

B whether consumer or industrial goods are produced
C whether economic goods or free goods are supplied
D whether labour or capital is used in production

6 The diagram shows demand and supply curves for a good. The market is in equilibrium at point X.

What would be the new equilibrium position if there were a successful advertising campaign for
the good and an increase in the cost of raw materials?

S2 S1
S3
price
B

A X C
D

D2 D1 D3
O quantity

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 4

7 The price elasticity of demand for smartphones is believed to be −2.0. A manufacturer decides to
cut prices by 10%.

What will be the effect of this change in price?

A demand will fall by 20%

B demand will rise by 5%
C quantity supplied will remain unchanged
D revenue will increase

8 What is a characteristic of a market economic system?

A consumers decide whether production is labour-intensive or capital-intensive

B factors of production are government-owned
C high levels of government intervention
D land and capital are privately owned

9 A government intends to build a new road through a forest.

What will be an external cost of this?

A the cost of building the road

B the loss suffered by those who would have used the forest
C the cost of maintaining the road
D the new jobs created from the construction of the road

10 Which function does a central bank provide for the general public?

A accepting deposits
B issuing banknotes
C making loans
D providing overdrafts

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 5

11 At higher wage rates an individual prefers to work shorter hours than receive extra income.

Which curve shows this?

A B

S
wage wage
rate rate
S

O O
hours worked hours worked

C D

S
wage wage
rate rate

O O
hours worked hours worked

12 In some countries, there has been a significant reduction in the number of trade union members.

Who are the members of trade unions?

A employers
B exporters
C importers
D workers

13 What would be most likely to encourage a firm to grow internally?

A when diseconomies of scale occur at low levels of output

B when economies of scale occur at high levels of output
C when new firms enter the market and increase competition
D when the firm only supplies the local market

© UCLES 2025 03_0455_12_2025_1.12 [Turn over

 6

14 A car-wash firm has 3 workers. Before specialisation, each worker washed 5 cars per day. After
specialisation, 30 cars per day are washed.

What is the percentage increase in productivity?

A 50% B 100% C 200% D 600%

15 The diagram shows the fixed costs, variable costs and total costs of a firm.

35
costs
30
($000)
25
20
15
10
5
0
100
output

What is the firm’s total variable cost at an output of 100 units?

A $25 B $5000 C $25 000 D $30 000

16 The table shows the average revenue of a firm at various levels of output.

average
output revenue
($)

1 10
2 8
3 6
4 4

What happens to total revenue as output rises?

A Total revenue falls and then rises.

B Total revenue falls continuously.
C Total revenue rises and then falls.
D Total revenue rises continuously.

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17 What is the definition of a government budget?

A a forecast of government spending and revenue for the following financial year
B an account of government taxation revenues for the current financial year
C an estimate of government capital spending for the current financial year
D an explanation of government spending for the following financial year

18 A government decides to increase defence expenditure and reduce direct taxes.

Which type of policy is this?

A exchange rate policy

B fiscal policy
C monetary policy
D trade protection policy

19 Governments use monetary policy such as increasing the rate of interest.

What is a result of increasing the rate of interest?

A It creates disincentives for wage earners.

B It discourages investment by entrepreneurs.
C It reduces the disposable income of consumers.
D It reduces government transfer payments.

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20 The table shows the distribution of the working population in millions (m) in various sectors of an
economy over two years.

year 1 year 2
economic sector
employment (m) employment (m)

education 4 3

engineering 6 8

farming 2 1

finance 8 6

healthcare 4 5

motor vehicle production 5 5

oil extraction 2 2

What can be concluded from the information?

A Less output was produced in the economy in year 2 than year 1.

B Fewer people were employed in the secondary sector in year 1 than year 2.
C More people were employed in the primary sector in year 2 than year 1.
D More people were employed in the tertiary sector in year 2 than year 1.

21 Which government intervention would increase the geographic mobility of labour?

A controlling firms locating in areas of low employment

B giving grants to firms moving into areas of high unemployment
C providing relocation expenses for workers
D subsidising declining industries

22 Which action by employers is most likely to reduce long-term economic growth?

A allowing workers time off to attend retraining courses

B encouraging workers to work flexibly in different roles
C granting workers regular short breaks during the working day
D replacing skilled workers with semi-skilled workers

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 9

23 The table shows the weights attached to various categories of goods in a Consumer Prices Index
(CPI) in two years.

CPI category year 1 year 2

clothing 100 200

food 400 300
energy 100 100
household goods 200 100
motoring 200 300
total 1000 1000

What can be concluded from the table when comparing year 1 and year 2?

A Real income spent by the average consumer on motoring increased.

B The cost of producing food has fallen.
C The CPI has not changed over the two years.
D The proportion of income spent on clothing has increased.

24 The table shows the Human Development Index (HDI) values for two countries.

country HDI value

X 0.90
Y 0.45

What might explain the difference in the HDI values?

A Country X has double the inflation rate of country Y.

B Country X has half the population of country Y.
C Country X spends more of its real GDP on foreign aid than country Y.
D Country X spends more of its real GDP on schooling than country Y.

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25 Wealthy countries have people who live in relative poverty.

What is the most likely cause of this?

A generous state pensions

B low national minimum wage
C progressive taxation
D subsidised healthcare

26 The diagram shows population data for a country for 1950, 2005 and 2050.

age age age

men women men women men women
100 100 100

80 80 80

60 60 60

40 40 40

20 20 20

0 0 0
1.2 0.8 0.4 0 0 0.4 0.8 1.2 1.2 0.8 0.4 0 0 0.4 0.8 1.2 0.8 0.4 0 0 0.4 0.8
population population population
millions millions millions
1950 2005 2050 (forecast)

What can be concluded from the diagram?

A Men outnumber women in each year.

B People are living longer over the period.
C The population has grown continuously.
D The workforce has grown continuously.

© UCLES 2025 03_0455_12_2025_1.12

 11

27 A country has large reserves of oil. It decides to produce a wide range of goods rather than specialise
in oil production.

What is not an acceptable reason in support of this decision?

A Oil is a non-renewable resource that could be exhausted quickly.

B Producing a wide range of goods increases the benefits from free trade.
C Relying on other countries for vital goods and services makes a country vulnerable.
D The price of oil is volatile, making export revenue unstable.

28 The US puts a 25% tariff on Chinese steel to protect jobs in the US steel industry.

Under which condition would this policy be most effective?

A The price elasticity of demand for Chinese steel is –2.5.

B The price elasticity of demand for Chinese steel is –0.5.
C The price elasticity of supply for Chinese steel is 2.5.
D The price elasticity of supply for Chinese steel is zero.

29 What might a central bank do to stop a fall in the value of its country’s currency?

A raise interest rates

B reduce taxes on imports
C remove controls on currency outflows
D sell their currency on the foreign exchange market

30 A government wishes to reduce the surplus on the current account of its balance of payments.

Which policy is likely to achieve this?

A cutting government spending

B devaluing its currency
C increasing existing import quotas
D increasing import duties

© UCLES 2025 03_0455_12_2025_1.12

 12

BLANK PAGE

Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.

Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.

© UCLES 2025 03_0455_12_2025_1.12

 Cambridge International Examinations
Cambridge International General Certificate of Secondary Education

ECONOMICS 0455/12
Paper 1 Multiple Choice May/June 2017
45 minutes
Additional Materials: Multiple Choice Answer Sheet
Soft clean eraser
*3853652755*

Soft pencil (type B or HB is recommended)

READ THESE INSTRUCTIONS FIRST

Write in soft pencil.

Do not use staples, paper clips, glue or correction fluid.
Write your name, Centre number and candidate number on the Answer Sheet in the spaces provided
unless this has been done for you.
DO NOT WRITE IN ANY BARCODES.

bestexamhelp.com
There are thirty questions on this paper. Answer all questions. For each question there are four possible
answers A, B, C and D.
Choose the one you consider correct and record your choice in soft pencil on the separate Answer Sheet.

Read the instructions on the Answer Sheet very carefully.

Each correct answer will score one mark. A mark will not be deducted for a wrong answer.
Any rough working should be done in this booklet.

This document consists of 9 printed pages and 3 blank pages.

IB17 06_0455_12/3RP
© UCLES 2017 [Turn over
 2

1 Which is not a factor of production?

A a farm
B a farmer
C a farmer’s bank account
D a second-hand tractor

2 Heavy rain caused floods in an area of a country.

What may be an opportunity cost of repairing the damage caused?

A the allocation of government funds to the area instead of on a new airport

B the cost of providing shelter for those made homeless
C the decline in the tourist industry in the area
D the loss of profits from businesses affected by the flood

3 The diagram shows a production possibility curve for cars and furniture.

W
cars
X

Y Z

O furniture

A recession causes a decrease in production in both cars and furniture.

Which movement would represent this change?

A X to W B X to Y C Z to W D Z to Y

4 In response to an increase in price from $5 per kilo to $6 per kilo a chicken farmer increased
supply from 400 kilos to 500 kilos per week.

What is the price elasticity of supply?

A 0.8 B 0.9 C 1.2 D 1.25

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 3

5 The diagram shows the demand for chocolate.

price
X

D
O
quantity demanded
per week

What could cause the movement from point X to point Y?

A a change in tastes
B a fall in the price of chocolate
C an increase in income
D a successful advertising campaign for chocolate

6 A bee-keeper maintains hives of bees to produce honey. The bees can pollinate neighbours’ fruit
trees but also give a painful sting to gardeners.

If both of these events occur, how will costs and benefits be affected?

A External benefits will fall and social costs will fall.

B External costs will rise and social benefits will fall.
C Social costs and social benefits will fall.
D Social costs and social benefits will rise.

7 In 2015 there was a significant fall in the world price of petrol (gasoline).

What would not have been a cause of the price fall?

A the continuing global recovery from the world economic recession

B the increasing exploitation of US oil reserves
C the re-entry of Iranian producers to the world oil market
D the shorter journeys from using the new Suez Canal

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 4

8 Which statement about financial matters is correct?

A Commercial banks’ main activity is the finance of international trade.

B Paper banknotes possess all the desirable properties needed to act as money.
C Stock exchanges trade mainly in second-hand stocks and shares.
D The central bank acts as the lender of last resort to companies facing bankruptcy.

9 What is most likely to be used to support a claim for wage increases in an industry?

A a decrease in the industry’s sales

B a decrease in the need for specialist training
C an increase in cheap imports of a rival product
D an increase in wages in a similar industry

10 The government increases the rate of income tax and decreases the rate of a sales tax (VAT).

From the initial equilibrium point of X, which letter indicates the new equilibrium point in a market
for normal goods?

price
S1
B
A S
X
S2
C
D

D1 D D2
O
quantity

11 In South Africa, the number of skilled workers is relatively low. However, average wages in South
Africa are double the average wage in Brazil and Turkey and they are 1.6 times higher than in
Malaysia.

What may be concluded from this information?

A Malaysian workers are more skilled than South African workers.

B Prices in South Africa are double those in Brazil.
C South Africa’s labour productivity is low.
D South African trade union bargaining power is strong.

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12 To achieve horizontal integration, a firm producing tyres could merge with another firm producing

A motor cars.
B rubber.
C tyre-producing machinery.
D tyres.

13 Which costs will necessarily fall continuously as output increases?

A average fixed costs

B average variable costs
C opportunity costs
D repayment costs of borrowing

14 A monopoly takes over an industry from competitive firms.

What is not likely to be true about a monopoly compared with a competitive firm?

A A monopoly will earn a higher rate of profit.

B A monopoly will gain a greater share of the market.

C A monopoly will offer a wider choice to the consumer.
D A monopoly will operate on a larger scale of production.

15 The table shows the costs of a firm.

units of output variable cost ($) total cost ($)

10 15 85
20 25 95
30 35 105
40 45 115

What is the value of the firm’s fixed costs?

A $10 B $15 C $70 D $85

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 6

16 When is a tax progressive?

A when some goods have a higher tax than others

B when the rate of tax increases as income increases
C when the tax is linked to the rate of inflation
D when the tax is on incomes rather than on goods or services

17 A government wishes to try to make the distribution of income in the country more equal.

Which policy would be most likely to achieve this?

A reducing housing subsidies

B reducing indirect tax on food
C reducing inheritance tax
D reducing tax on the dividends on stocks and shares

18 In trying to achieve one of its aims a government may make it difficult to achieve another aim.

What is an example of this conflict?

A Achieving a more even distribution of income may prevent a rise in the average standard of
living.
B Achieving an increase in economic growth may prevent full employment.
C Achieving full employment may prevent stable prices.
D Achieving stable prices may prevent a current account surplus on the balance of payments.

19 Which policy combination will be the most effective if a government wishes to increase the level
of employment?

A decrease general taxation and decrease the rate of interest

B decrease general taxation and increase the rate of interest
C increase general taxation and decrease the rate of interest
D increase general taxation and increase the rate of interest

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 7

20 A newspaper reported that a country’s economy had grown by 3% during the last year.

What must have increased in that year?

A costs of production
B gross domestic product
C unemployment
D wage levels

21 What is meant by deflation?

A a fall in the general price level

B a fall in the international value of a currency
C a fall in the rate of inflation
D a fall in the real value of money

22 The information below refers to an economy for a financial year.

government expenditure = $2866 million

government revenue = $1940 million

What was the budget balance of the government in that year?

A $926 million in deficit

B $4806 million in deficit
C $926 million in surplus
D $4806 million in surplus

23 What is the change in GDP per head, after taking account of price increases (real change),
between 2000 and 2013?

population consumer prices

year GDP $billion
million index (CPI)

2000 3 100 4000

2013 4 120 6000

A from $15 to $125

B from $1250 to $1333
C from $1333 to $1250
D from $1333 to $1500

© UCLES 2017 0455/12/M/J/17 [Turn over

 8

24 Which statement about the poorest families in developing economies is not likely to be correct?

A The children will be expected to work to help provide income.

B The family will find it easy to obtain loans to develop their farms.
C The family will have a low earning capacity.
D The family will suffer from malnutrition and lack of medical care.

25 The diagram shows population projections until the year 2075 for selected areas.

12
billion
10 Africa
8
other Asia
6
India
4
China
2 Latin America
developed countries
0
1950 2000 2050 2075

Assuming no migration, which situation must exist if the population is to change in the manner
shown in the diagram?

A birth rate falling and death rate falling

B birth rate greater than death rate
C death rate greater than birth rate
D death rate rising and birth rate falling

26 The table shows information about four countries.

Which country is likely to be least developed?

% of labour force GDP per head

life expectancy
in service industries ($)

A 20 49 380
B 35 49 350
C 40 53 350
D 45 63 450

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 9

27 Which government policy is most likely to increase the volume of exports?

A devaluation
B embargoes
C quotas
D tariffs

28 What might encourage international specialisation between countries?

A free trade
B inefficiencies in production
C labour immobility
D tariffs

29 In 2015, Russia banned the imports of food, such as milk, from the European Union (EU).

Which outcomes are most likely to happen as a result?

milk market price of milk profits of

in Europe in Russia EU farmers

A excess demand fall rise

B excess demand rise rise
C excess supply fall fall
D excess supply rise fall

30 In 2010, Vietnam experienced a deficit in the value of its trade in goods (visible) despite exporting
a greater number of goods than it imported.

What could explain this?

A The average price of its goods imported exceeded the average price of its goods exported.
B The average value of its goods exported exceeded the average value of its goods imported.
C The country had a deficit on its trade in services.
D The country’s government imposed tariffs on imports.

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© UCLES 2017 0455/12/M/J/17

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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
International Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cie.org.uk after the live examination series.

Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local
Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.

© UCLES 2017 0455/12/M/J/17

 Cambridge International Examinations
Cambridge International General Certificate of Secondary Education

ECONOMICS 0455/12
Paper 1 Multiple Choice May/June 2018
45 minutes
Additional Materials: Multiple Choice Answer Sheet
Soft clean eraser
*9282399993*

Soft pencil (type B or HB is recommended)

READ THESE INSTRUCTIONS FIRST

Write in soft pencil.

Do not use staples, paper clips, glue or correction fluid.
Write your name, Centre number and candidate number on the Answer Sheet in the spaces provided
unless this has been done for you.
DO NOT WRITE IN ANY BARCODES.

There are thirty questions on this paper. Answer all questions. For each question there are four possible

bestexamhelp.com
answers A, B, C and D.
Choose the one you consider correct and record your choice in soft pencil on the separate Answer Sheet.

Read the instructions on the Answer Sheet very carefully.

Each correct answer will score one mark. A mark will not be deducted for a wrong answer.
Any rough working should be done in this booklet.

This document consists of 10 printed pages and 2 blank pages.

IB18 06_0455_12/4RP
© UCLES 2018 [Turn over
 2

1 In economics, natural sunlight is classified as a free good.

What is the reason for this?

A Sunlight is a gift of nature.

B Sunlight is a renewable resource.
C There is no opportunity cost of using sunlight.
D Unlimited amounts of sunlight can be consumed.

2 What would be classified as the factor of production capital for an airline?

A the aircraft operated by the airline

B the money the airline keeps in the bank
C the pilots the airline uses
D the shares of the airline quoted on the stock market

3 The diagram shows a production possibility curve (PPC).

Which position is most likely to lead to the greatest outward shift of the PPC?

consumer
goods
B
A

C
D

O
capital goods

4 What is a major advantage of a market economic system over a mixed economic system?

A All production of goods and services is determined by consumer demand.

B Ownership of resources is divided between private and public sectors.
C Producers include any external costs they create in the price of the good.
D There will always be an even distribution of income and wealth.

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5 The diagram shows the market for beef in the US with the original equilibrium at X.

What will be the new equilibrium position if incomes in the US rise?

S3
price S1
S2

B C
X
A
D
D2
D1
D3
O
quantity

6 The table shows government estimates of the private and external benefits and costs of building
a new dam.

$ million

private benefits 250

external benefits 325
private costs 200
external costs 150

What is the difference between the social benefits and social costs of building the dam?

A $25 million B $50 million C $175 million D $225 million

© UCLES 2018 0455/12/M/J/18 [Turn over

 4

7 The diagram shows the supply curve for a good.

S
price
($) 4

0 10 20 30
quantity (units)

What is the price elasticity of supply when the price rises from $2 to $4?

A 0.2 B 0.5 C 1 D 2

8 What does a commercial bank not provide?

A cash
B bonds
C loans
D mortgages

9 What will be likely to increase the wages of airline pilots?

A Incomes increase in the world’s major economies.

B Terrorist attacks decrease tourist travel.
C The cost of aviation fuel rises.
D The world economy goes into recession.

10 What is most likely to help a trade union’s claim for wage increases in an industry?

A a decrease in the price of a close substitute for the product

B a decrease in the qualifications needed for the job
C an increase in the number of workers
D an increase in the profits of the industry

© UCLES 2018 0455/12/M/J/18

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11 The table shows some information for a computer engineer in 2015.

salary 40 000
fees earned from consultancy 15 000
credit card repayment 5 000

Income tax is fixed at 20%. The engineer saved 10% of the disposable income.

How much was saved?

A $3200 B $4000 C $4400 D $5500

12 What is a characteristic of a perfectly competitive firm?

A absence of competitors
B non-price competition
C one dominant firm
D price taker

13 What is a possible cause of diseconomies of scale?

A an increase in extra administration

B an increase in raw materials costs
C an increase in taxation on company profits
D an increase in the national minimum wage

14 A firm that sells its product for $6 a unit has the following total costs.

output (units) 0 10 20 30
total costs ($) 40 100 120 150

Which statement is correct?

A Average cost is lowest when 10 units are produced.

B The firm does not make any profit when 20 units are sold.
C The firm has no fixed costs.
D Total variable costs fall continuously over these outputs.

© UCLES 2018 0455/12/M/J/18 [Turn over

 6

15 Which statement about fixed costs is correct?

A They exist only in the long run.

B They include raw material and direct labour costs.
C They increase at the same rate as output.
D They must be paid even if there is no output.

16 Which is a supply-side policy?

A increasing interest rates

B increasing taxation
C providing training courses
D selling government bonds

17 What is an aim of government policy?

A income tax
B interest rates
C stable prices
D unemployment

18 A government has the following revenue.

revenue
($ m)

corporation profits tax 20

inheritance tax 30
duty on imports 40
income tax 50
sales tax (VAT) 200

What is the total amount of indirect tax revenue?

A $140 m B $200 m C $240 m D $270 m

© UCLES 2018 0455/12/M/J/18

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19 Which situation involving the building industry is most likely to be investigated by a government
body set up to control restrictive practices?

A a builder purchasing a plot of land for development of housing

B groups of suppliers of building materials agreeing to fix prices
C several builders bidding for the same contracts
D several builders using different sources of supply

20 The table shows the change in Gross Domestic Product (GDP) of four countries.

Which country has experienced a recession?

quarterly percentage change in GDP

Q1 Q2 Q3 Q4
% % % %

A – 6.0 1.0 – 2.0 1.0

B 0.0 –1.0 0.0 – 0.1
C 0.1 0.1 0.1 – 3.0
D 1.0 1.0 – 0.5 – 0.5

21 What determines the weights in the consumer prices index (CPI)?

A the average income received by the various households

B the average increase in the prices of the different goods
C the proportion of income spent by the average household on particular goods
D the proportion of income that the average household saves

22 There was a fall in investment spending by businesses in the third quarter of 2015.

What would be the likely result of this?

A an increase in economic growth

B an increase in exports
C an increase in incomes
D an increase in unemployment

© UCLES 2018 0455/12/M/J/18 [Turn over

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23 The table shows units of output, value of output and number of people employed in an industry
over three years.

output output value number employed

(units, millions) ($ millions) (000)

year 1 10 10 5
year 2 21 25 7
year 3 32 40 8

What can be concluded from the table?

A Inflation has increased.

B Productivity has increased.
C Profit has increased.
D Working population has increased.

24 Which feature is found in a developed country rather than a developing country?

A high levels of rural to urban migration

B highly organised international financial markets
C low proportion of workforce in service industries
D low school-leaving age

25 Over two-thirds of the world’s poorest people live in rural areas. They are mainly involved in
subsistence agriculture.

What explains why poverty remains at a high level for subsistence farming families?

A a lack of finance to buy machinery to improve productivity

B low international prices for food due to overproduction
C the size of families is too small to work the land
D women are discouraged from doing agricultural work

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26 The government of a developing country allows a multinational mining company to mine minerals
in order to improve the standard of living of the local people.

Which action by the multinational company (MNC) will not lead to an improvement in the
standard of living of the local people?

A building roads to assist transport

B exporting mineral ore

C providing skills training
D returning profits overseas

27 A country wishes to follow a policy of trade protection.

Which action would it take?

A increase the level of import quotas

B reduce import tariffs
C remove exchange controls
D subsidise export producers

28 In 2012 the UK held the Olympic Games, which attracted a large number of visitors from foreign
countries.

Which item of the UK’s current account balance will have benefited directly from this event?

A export trade in goods

B export trade in services
C import trade in goods
D import trade in services

29 In 2015, the value of the South African currency (the rand) depreciated against the US dollar.

What effect did this have on the US economy?

A Exports to South Africa became more expensive.

B The current account deficit of the US decreased.
C The US experienced higher levels of inflation.
D Unemployment in the US decreased.

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30 The table shows the rice yield in four countries.

rice yield
country
(kilos per hectare)

Japan 64
China 53
Bangladesh 20
Thailand 20

What may be concluded from this information?

A Bangladesh and Thailand produce the same amount of rice.

B Japan produces more than three times as much rice as Bangladesh.
C Japan produces the largest amount of rice per hectare.
D Japan produces the largest amount of rice per person employed.

© UCLES 2018 0455/12/M/J/18

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© UCLES 2018 0455/12/M/J/18

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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
International Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cie.org.uk after the live examination series.

Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local
Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.

© UCLES 2018 0455/12/M/J/18

 Cambridge Assessment International Education
Cambridge International General Certificate of Secondary Education

ECONOMICS 0455/12
Paper 1 Multiple Choice May/June 2019
45 minutes
Additional Materials: Multiple Choice Answer Sheet
Soft clean eraser
*8190973957*

Soft pencil (type B or HB is recommended)

READ THESE INSTRUCTIONS FIRST

Write in soft pencil.

Do not use staples, paper clips, glue or correction fluid.
Write your name, centre number and candidate number on the Answer Sheet in the spaces provided
unless this has been done for you.
DO NOT WRITE IN ANY BARCODES.

bestexamhelp.com
There are thirty questions on this paper. Answer all questions. For each question there are four possible
answers A, B, C and D.
Choose the one you consider correct and record your choice in soft pencil on the separate Answer Sheet.

Read the instructions on the Answer Sheet very carefully.

Each correct answer will score one mark. A mark will not be deducted for a wrong answer.
Any rough working should be done in this booklet.

This document consists of 10 printed pages and 2 blank pages.

IB19 06_0455_12/3RP
© UCLES 2019 [Turn over
 2

1 A government wishes to increase agricultural output. It gives farmers the tools to irrigate the
farmers’ fields.

Which factors of production are provided by the farmers?

A capital and enterprise

B enterprise and labour
C labour and land
D land and capital

2 The diagram shows a production possibility curve (PPC) for an economy that produces both
capital goods and consumer goods.

At which point will the economy show the highest potential for sustained long run economic
growth?

D
consumer
goods
C

O
capital goods

3 In recent years more golf courses, which use large quantities of water, have opened in China.

What may be the opportunity cost of this?

A cost of water
B loss of farmland
C sales of golf equipment
D wages of golf course staff

4 Cuba is implementing free market reforms.

What is a likely advantage of this?

A a wider variety of goods and services produced

B greater equality between the different groups in society
C increased provision of public goods
D less consumption of goods with external costs

© UCLES 2019 0455/12/M/J/19

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5 An airline upgrades its services by providing bigger aircraft. The airline claims it will reduce
catering waste and lower carbon (CO2) emissions per passenger journey although fares may rise.

What is a private cost and an external benefit of this decision?

private cost external benefit

A bigger aircraft higher fares

B higher fares lower CO2
C less catering waste bigger aircraft
D lower CO2 less catering waste

6 What can be concluded from the demand curve for the product shown in the diagram?

price demand

0 20 40
quantity

A Price increases will raise the producers’ revenue.

B Producers are unable to respond to a price rise.
C The product is one with many substitutes.
D There are 20 people able to buy the product.

7 A mobile (cell) phone operator increases the price of making calls on its network. After the price
increase, the revenue of the mobile phone operator falls by 10%.

What is the price elasticity of demand (PED) for the mobile operator’s service?

A elastic
B inelastic
C perfectly elastic
D unit elastic

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 4

8 Why does specialisation increase the productivity of employees?

A Average cost of production increases.

B Staff turnover is high.
C Time is saved by not moving between tasks.
D Workers lose interest in their job.

9 In recent years some central banks have reduced interest rates below 1% per year.

What is the purpose of this monetary policy?

A to discourage lending by the commercial banks

B to encourage investment to stimulate the economy
C to increase individual savings
D to reduce inflation

10 What is the most important factor that affects how much a family saves?

A the income of the family

B the level of taxation
C the rate of inflation
D the reliability of banks

© UCLES 2019 0455/12/M/J/19

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11 The table shows the change in real incomes for a number of occupations between 1985 and
2015.

change in
occupation real income
%

doctors 153
lawyers 114
accountants 60
bricklayers 37
bus and coach drivers 19
fork-lift truck drivers –5

What can be concluded from the table?

A All occupations were better off in 2015 than in 1985.

B Fork-lift truck drivers earned the lowest wages in 2015.
C Doctors have earned more than lawyers since 1985.
D Professionals received higher percentage increases in income than manual workers.

12 What is the main difference between capital-intensive production and labour-intensive

production?

A the market structure of the production process

B the output that the production process creates
C the resources on which the production relies
D the size of the firm that uses the production process

13 What is the definition of diseconomies of scale?

A the decrease in average revenue as output increases

B the decrease in fixed cost as output increases
C the increase in average total costs as output increases
D the increase in total costs as output increases

© UCLES 2019 0455/12/M/J/19 [Turn over

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14 The diagram shows the fixed costs, variable costs and total costs of a firm.

costs
W

O Z
output

Which distance represents the firm’s fixed costs?

A WX B WY C XY D XZ

15 An entrepreneur buys a workshop for $200 000 to make plastic boxes. In the first year of
operation he spends $70 000 on materials, employs ten production workers paid by the amount
produced (piece rate) at a total cost of $80 000 and buys two delivery vehicles for $10 000 each.

What are his total variable costs?

A $100 000 B $150 000 C $220 000 D $370 000

16 What is most likely to cause a rise in the rate of inflation in an economy?

A a fall in import prices

B a fall in wage rates
C a rise in the level of government spending
D a rise in the level of unemployment

17 The government increases taxation in order to fund an increase in spending on government

training schemes.

Which policy combination would this involve?

A fiscal policy and monetary policy only

B fiscal policy and supply-side policy only
C monetary policy and supply-side policy only
D monetary policy, supply-side policy and fiscal policy

© UCLES 2019 0455/12/M/J/19

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18 The diagram shows the effect of the imposition of a tax on a product.

S2
price
S1

U V W
X Y Z

D1

O Q2 Q1
quantity

Which area represents the part of the tax paid by consumers of the product?

A U+V
B U+V+W
C U+V+X+Y
D U+X

19 Why might a government decide to subsidise a high-cost steel industry?

A if cheaper imports of steel are improving the balance of payments

B if economic growth is increasing due to the success of other industries
C if redundant steel workers can easily be retrained
D if unemployment in steel producing areas is increasing

20 The table shows possible sequences between the rate of interest and other economic variables.

Which sequence is the most likely?

interest rate borrowing investment GDP

A higher decrease increase increase

B higher increase decrease decrease
C lower decrease decrease decrease
D lower increase increase increase

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21 Why is the Human Development Index (HDI) a better measure of living standards than GDP per
head?

A It takes into account changes in output.

B It takes into account changes in population.
C It takes into account health and education data.
D It takes into account inflation.

22 What describes frictional unemployment?

A unemployment caused by a general fall in economic activity

B unemployment caused by the time of year
C unemployment caused by wages being too high
D unemployment caused by workers searching for jobs

23 In January 2016 the rate of inflation in a country changed from 3% to 2%. In March 2016 the rate
of inflation was 4%.

What happened to the price level in January and March?

January March

A fell fell
B fell rose
C rose fell
D rose rose

24 What usually happens as a developing country becomes more developed?

A The average age of the population falls.

B The fertility rate declines.
C The infant mortality rate increases.
D The primary sector expands.

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25 Given the following information, which country is most likely to have the highest standard of
living?

birth death life infant

rate rate expectancy mortality rate

A Bangladesh 27 10 58 93
B Bhutan 36 14 53 107
C Botswana 31 21 40 57
D Brunei 25 5 72 22

26 In a country the birth rate increased but the population decreased.

What could have happened to other factors to cause this?

A a fall in infant mortality but no change in the death rate

B a rise in net immigration but no change in the death rate
C no change in migration but the death rate rose
D the death rate fell with no change in migration

27 The US government decides to reduce the size of the quota on a good it buys from China.

What is likely to happen?

A The good will become cheaper in the US.

B The US balance of trade will worsen.
C The US government’s revenue will decline.
D There will be less of the good imported into the US.

28 The world demand for oil is price-inelastic and oil is paid for in US dollars.

If the price of oil falls rapidly, how might it affect the exchange rate of the US dollar?

market for US dollar exchange rate for US dollar

A greater demand for US$ value increases

B greater supply of US$ value falls
C less demand for US$ value falls
D less supply of US$ value increases

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29 What is the most likely disadvantage of international specialisation?

A decreased levels of global output

B increased average production costs
C increased productivity levels
D overdependence on other economies

30 A large amount of the agricultural products in a country were damaged by floods.

What is likely to have happened to the price of agricultural products and the volume of imports of
agricultural products?

price of products volume of imports

A fall fall
B fall rise
C rise fall
D rise rise

© UCLES 2019 0455/12/M/J/19

 11

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© UCLES 2019 0455/12/M/J/19

 12

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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.

Cambridge Assessment International Education is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of the University of
Cambridge Local Examinations Syndicate (UCLES), which itself is a department of the University of Cambridge.

© UCLES 2019 0455/12/M/J/19

 Cambridge IGCSE™

ECONOMICS 0455/22
Paper 2 Structured Questions May/June 2024

2 hours 15 minutes

You must answer on the enclosed answer booklet.

* 9 7 3 6 6 3 7 6 0 6 *

You will need: Answer booklet (enclosed)

INSTRUCTIONS
● Answer four questions in total:
Section A: answer Question 1.
Section B: answer three questions.
● Follow the instructions on the front cover of the answer booklet. If you need additional answer paper,
ask the invigilator for a continuation booklet.
● You may use a calculator.

INFORMATION
● The total mark for this paper is 90.
● The number of marks for each question or part question is shown in brackets [ ].

This document has 8 pages. Any blank pages are indicated.

DC (JP/JG) 328338/4
© UCLES 2024 [Turn over
 2

Section A

Read the source material carefully before answering Question 1.

Source material: The challenges facing the Tunisian government

Tunisia fact file 2020

Trade in goods and services balance – $3bn
Primary and secondary income balance $0.6bn
Unemployment rate 17%
Tunisian dinar (TND) / US dollar exchange rate 1TND = $0.35

Tunisia had a government budget deficit for a number of years. Between 2015 and 2020, the Tunisian
government carried out reforms to reduce the tax burden, to rely more on indirect taxes and to make
the tax system more efficient and more economical.

As well as taxing a range of products, the Tunisian government also regulates the price of some
products including flour and milk. Government control of the price of flour and milk can help reduce
poverty and prevent monopoly firms exploiting their market power. The Tunisian government also
subsidises the production of electricity. The subsidy affects the cost of producing electricity, and the
change in the price of electricity affects other firms’ costs. This form of government spending can help
reduce inflationary pressure but can also affect the efficiency of electricity production.

While some firms benefit from the subsidy on electricity production, they also experience periods when
their other costs of production rise. Tunisian shoe producers have recently experienced a rise in wage
costs and a decline in the number of workers they employ. The average wage paid to Tunisian workers
and the Tunisian inflation rate changed between 2014 and 2020 as shown in Fig. 1.1.

9
8
7
Percentage (%) 6
5
4
3
2 Change in average wage
1 Inflation rate
0
2014 2015 2016 2017 2018 2019 2020
Year

Fig. 1.1 Change in average wage and the inflation rate in Tunisia 2014 – 2020

© UCLES 2024 0455/22/M/J/24

 3

Unemployment has been a problem in Tunisia for many years. In 2020, the government passed a law
which promised that workers who had been unemployed for ten years or more would be employed by
the public sector. To reduce the time spent moving between jobs, it increased labour market information
available to workers and employers and did not raise unemployment benefit in line with inflation.

The Tunisian foreign exchange rate fluctuated in 2020. This affected the price of the country’s exports
and imports. It also affected the current account of its balance of payments, economic growth, inflation
and unemployment.

Answer all parts of Question 1. Refer to the source material in your answers.

1 (a) Calculate Tunisia’s balance on the current account of its balance of payments. [1]

(b) Identify two qualities of a good tax that the Tunisian government aimed to achieve. [2]

(c) Explain one reason why the Tunisian government regulates the price of flour and milk. [2]

(d) Explain two ways the Tunisian government tried to reduce frictional unemployment. [4]

(e) Analyse the relationship between the change in Tunisia’s average wage and inflation rate. [4]

(f) Analyse, using a demand and supply diagram, how an increase in wage costs would affect
the market for shoes. [5]

(g) Discuss whether or not the Tunisian government should continue to subsidise electricity
production. [6]

(h) Discuss whether or not a rise in the value of the Tunisian dinar would benefit the Tunisian
economy. [6]

© UCLES 2024 0455/22/M/J/24 [Turn over

 4

Section B

Answer any three questions.

Each question is introduced by stimulus material. In your answers you may refer to the material and/or
other examples you have studied.

2 In 2020, wages paid to Mexican workers, including those in the primary sector, fell. This fall
contributed to a 9% rise in poverty in the country. In the same year, many small and medium-sized
firms closed down. The country also suffered from traffic congestion. Its capital, Mexico City, is the
world’s most congested city.

(a) Identify two possible opportunity costs of producing primary sector products. [2]

(b) Explain two policy measures which may reduce poverty. [4]

(c) Analyse how the closure of firms may harm consumers. [6]

(d) Discuss whether or not a government should encourage people to walk to school and work.
[8]

3 South America is a large geographical area with millions of microeconomic decision-makers.

During a recent pandemic, schools stayed closed for longer than anywhere else in the world. As
a result, students received less education. The World Bank estimated that the average student
would earn $24,000 less over their lifetime. Some students may earn only the minimum wage. In
2020, South America had an inflation rate of 6.3% and an economic growth rate of only 1.8%.

(a) Identify the difference between microeconomics and macroeconomics. [2]

(b) Explain how less education can reduce a person’s lifetime earnings. [4]

(c) Analyse how the introduction of a minimum wage could affect unemployment. [6]

(d) Discuss whether or not an economy with a high inflation rate will have a low economic growth
rate. [8]

4 Tajikistan is one of Asia’s low-income countries. Its currency, the somoni, has the key characteristics
of money. More than one million Tajik people work abroad, mostly in Russia. In 2020, the Tajik
government was concerned that the country’s economy might experience a recession which could
cause a fall in tax revenue. Despite this possibility, some Tajik firms bought new capital equipment.

(a) Identify two reasons why tax revenue is likely to fall during a recession. [2]

(b) Explain two characteristics of money. [4]

(c) Analyse the advantages an economy may gain from having some of its people working in
other countries. [6]

(d) Discuss whether or not consumers would benefit from firms buying new capital equipment.
[8]

© UCLES 2024 0455/22/M/J/24

 5

5 Free goods and economic goods are consumed in Poland. In 2020, demand for both economic
goods and factors of production increased in Poland. For example, Polish consumers demanded
more football shirts and the Polish government increased its spending on housing for the country’s
population.

(a) Identify two free goods. [2]

(b) Explain two influences on demand for factors of production. [4]

(c) Analyse the effect of an increase in demand for football shirts on demand for football shorts
and demand for basketball shirts. [6]

(d) Discuss whether or not an increase in government spending on housing would benefit an
economy. [8]

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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.

Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.

© UCLES 2024 0455/22/M/J/24

 Cambridge IGCSE™

ECONOMICS 0455/22
Paper 2 Structured Questions October/November 2023

2 hours 15 minutes

You must answer on the enclosed answer booklet.

* 2 8 1 3 7 9 1 3 6 0 *

You will need: Answer booklet (enclosed)

INSTRUCTIONS
● Answer four questions in total:
Section A: answer Question 1.
Section B: answer three questions.
● Follow the instructions on the front cover of the answer booklet. If you need additional answer paper,
ask the invigilator for a continuation booklet.
● You may use a calculator.

INFORMATION
● The total mark for this paper is 90.
● The number of marks for each question or part question is shown in brackets [ ].

This document has 8 pages. Any blank pages are indicated.

DC (LK) 313636/2
© UCLES 2023 [Turn over
 2

Section A

Read the source material carefully before answering Question 1.

Source material: Will Honduras become a more successful economy?

Honduras fact file 2020

Population 10 m
Population without access to electricity 0.83 m
Unemployment rate 6.1%
Inflation rate 4.2%
Government budget deficit as % of GDP 9.5%

Honduras is a lower middle-income country which relies heavily on trade with the US. More than half of
Honduran exports go to the US and 40% of its imports come from the US. A high number of Hondurans
work in the US and send money back home to their relatives.

Honduras used to concentrate on growing bananas and coffee, gaining skills and a good reputation
in those industries. Now, Honduras produces a greater range of products including clothes, chemicals
and paper. This diversification has reduced the uncertainty arising from sudden changes in demand
and supply. For example, tariffs could be imposed on Honduran coffee or there could be a report
stating that eating bananas is good for health.

While employment is declining in agriculture, it is increasing in the clothes industry in Honduras.

Training for workers in the clothes industry is expected to increase and working conditions to improve.
The firms are also using more capital goods. It is, however, uncertain what will happen to the prices of
cotton, wool and other materials used to make clothes.

A successful clothes industry has the potential to reduce poverty in Honduras. The Honduran
government tries to reduce poverty by, for example, providing unemployment benefit. A major reason
for the government seeking to lower poverty is to increase life expectancy. Table 1.1 shows levels
of poverty (percentage of population living on less than $1.90 a day) and life expectancy in selected
countries.

Table 1.1 Percentage of population living in poverty and life expectancy in selected countries

Country % of population living in poverty Life expectancy (years)

Chad 38.1 54
Honduras 16.9 75
Kenya 37.1 66
Maldives 3.5 79
South Sudan 44.7 58
Sweden 0.2 83

A more successful Honduran economy would raise incomes. The country has a progressive income
tax system, so there could be a significant rise in tax revenue. A more successful economy would also
be likely to encourage more investment. Unemployment would be expected to fall which, in turn, could
influence consumer spending.
© UCLES 2023 0455/22/O/N/23
 3

Answer all parts of Question 1. Refer to the source material in your answers.

1 (a) Calculate what percentage of Honduran people did not have access to electricity in 2020. [1]

(b) Identify two benefits the Honduran economy could gain from a growth in the US economy.
[2]

(c) Explain one advantage of an economy specialising. [2]

(d) Explain two ways a government could redistribute income. [4]

(e) Draw a demand and supply diagram to show how a report stating that bananas are good for
health would affect the market for bananas. [4]

(f) Analyse the relationship between the percentage of population living in poverty and life
expectancy. [5]

(g) Discuss whether or not the cost of producing clothes in Honduras will fall in the future. [6]

(h) Discuss whether or not a fall in unemployment in Honduras is likely to cause inflation. [6]

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Section B

Answer any three questions.

Each question is introduced by stimulus material. In your answer you may refer to this material and/or
to other examples that you have studied.

2 Botswana uses both capital goods and labour in its diamond mining industry. The country had an
average economic growth rate of 3.8% between 2015 and 2019 compared to a global average
of 2.8%. Over this period, the country experienced a low inflation rate and a move away from
protectionism and towards free international trade.

(a) Define, with an example, a capital good. [2]

(b) Explain two reasons why a low inflation rate may increase a country’s economic growth rate.
[4]
(c) Analyse how a government could reduce protectionism and move towards free international
trade. [6]

(d) Discuss whether or not a country will benefit from diamond mining. [8]

3 In 2020, some firms in Suriname, a South American country, stopped production. This was
because the firms could not cover their variable costs, as well as some of their fixed costs. The
reduction in the country’s output resulted in a rise in its unemployment rate. The government
used supply-side policy measures to reduce unemployment. In 2021, the number of firms in some
markets fell again, but this time it was when output was rising.

(a) Define, with an example, a fixed cost. [2]

(b) Explain two types of unemployment. [4]

(c) Analyse how supply-side policy measures could reduce unemployment. [6]

(d) Discuss whether or not having fewer firms in a market will benefit consumers. [8]

4 In the US, the supply of meat from emus, a large bird, is price-elastic. Recently, US farmers have
switched to keeping other livestock and growing crops that changed their demand for labour. US
farmers are influenced by the subsidies the government provides for the production of selected
food items. Some people are reluctant to become farm workers as they think living standards are
low in rural areas.

(a) Define elastic supply. [2]

(b) Explain two reasons why a government may subsidise food production. [4]

(c) Analyse what influences a farmer’s demand for labour. [6]

(d) Discuss whether or not people living in cities have a higher living standard than those living in
rural areas. [8]

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5 In 2020, Singapore experienced a decrease in both its population size and its labour force. 2020
was a year of great change in a number of Singaporean markets. Some moved from disequilibrium
to equilibrium. Despite all these changes, Singapore managed to increase its exports of goods
and services.

(a) Identify two benefits of a decrease in a country’s population size. [2]

(b) Explain how a market moves from disequilibrium to equilibrium. [4]

(c) Analyse, using a production possibility curve (PPC) diagram, the effect of a decrease in the
size of a country’s labour force on its economy. [6]

(d) Discuss whether or not an increase in exports will benefit an economy. [8]

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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.

Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.

© UCLES 2023 0455/22/O/N/23

 Cambridge IGCSE™

ECONOMICS 0455/22
Paper 2 Structured Questions October/November 2024

2 hours 15 minutes

You must answer on the enclosed answer booklet.

* 4 9 6 2 3 9 7 0 3 1 *

You will need: Answer booklet (enclosed)

INSTRUCTIONS
● Answer four questions in total:
Section A: answer Question 1.
Section B: answer three questions.
● Follow the instructions on the front cover of the answer booklet. If you need additional answer paper,
ask the invigilator for a continuation booklet.
● You may use a calculator.

INFORMATION
● The total mark for this paper is 90.
● The number of marks for each question or part question is shown in brackets [ ].

This document has 8 pages. Any blank pages are indicated.

DC (WW) 336210/2
© UCLES 2024 [Turn over
 2

Section A

Read the source material carefully before answering Question 1.

Source material: Changes in Jordan’s economy and population

Jordan fact file 2020

Population 11m
Economic growth rate -1.5%
Labour force employed in the primary sector 2%
Labour force employed in the tertiary sector 79%
Unemployment rate 23%
Inflation rate 2%
Trade in services balance -$1bn
Import tariff revenue $0.7bn
Primary income balance $0.8bn

In 2020, Jordan had a deficit on the current account of its balance of payments. This deficit contributed
to a decline in Jordan’s total demand in that year. This lower total demand was the most important
reason why the number of workers was greater than the number of jobs available. Employment fell in
most of Jordan’s industries.

One of Jordan’s main industries is tourism. Recent years have seen mergers between some of Jordan’s
tourism firms. These mergers reduced the prices of some holidays and raised their quality.

Jordan’s population continues to grow. This is mainly because of net immigration, but also because
the country’s birth rate exceeds its death rate. Table 1.1 shows the birth rate and average age in six
countries in 2020.

Table 1.1 Birth rate and average age in six selected countries in 2020

Content removed due to copyright restrictions.

Changes in the size of a country’s population affect the market for a range of products including
clothing. An increase in population size also puts pressure on the country’s sources of energy. The
Jordanian government has several large renewable energy projects, and plans to spend even more
on such projects. Greater reliance on renewable energy, including wind and solar power, can reduce
environmental damage and can be relatively cheap in the long run. However, most renewable energy
generators, including hydroelectric power stations, are expensive to build. Also, wind turbines and solar
panels rely on favourable weather conditions.
© UCLES 2024 0455/22/O/N/24
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Some of the spending by the Jordanian government is financed by borrowing. At the start of 2021, the
Jordanian central bank was expected to raise the rate of interest. This was because total demand was
predicted to increase and there would be a return to positive economic growth. A higher interest rate
might affect Jordan’s foreign exchange rate and investment.

Answer all parts of Question 1. Refer to the source material in your answers.

1 (a) Calculate the percentage of the Jordanian labour force employed in the secondary sector. [1]

(b) Identify two components of the current account of Jordan’s balance of payments. [2]

(c) Explain the main type of unemployment experienced by Jordan in 2020. [2]

(d) Explain two advantages the Jordanian economy may gain from the mergers between its
tourism firms. [4]

(e) Analyse the relationship between birth rate and average age. [4]

(f) Analyse, using a demand and supply diagram, how an increase in population size will affect
the market for clothing. [5]

(g) Discuss whether or not the Jordanian government should spend more on renewable energy.
[6]

(h) Discuss whether or not the Jordanian central bank should have raised the rate of interest
in 2021. [6]

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 4

Section B

Answer any three questions.

Each question is introduced by stimulus material. In your answers you may refer to the material and/or
other examples you have studied.

2 In 2021, the production point on the UK’s production possibility curve (PPC) changed. Average
wages increased. The average annual wage of a waiter was $23,580 while that of a chief executive
of a large commercial bank was $1,617,000. A rise in wages enables people to eat in restaurants
more often. Some of the food sold in UK restaurants is imported. In 2021, the UK government
signed free trade agreements, removing import restrictions, with a number of countries.

(a) Identify two places where a production point could be located on a PPC diagram. [2]

(b) Explain two reasons why someone may switch from eating in one restaurant to eating in
another restaurant. [4]

(c) Analyse why the wage of a chief executive of a large commercial bank is higher than that of a
waiter. [6]

(d) Discuss whether or not free trade will increase economic growth. [8]

3 The central bank of Madagascar intervenes in the country’s foreign exchange market. However,
Madagascar has a largely market economic system. Nearly 70% of Madagascar’s population
live in poverty. Most of the country’s industries are labour-intensive. In 2020, Madagascar had
an economic growth rate of 6% and a deficit on the current account of its balance of payments
of $0.6bn.

(a) Define foreign exchange market. [2]

(b) Explain two reasons why a firm may adopt labour-intensive production. [4]

(c) Analyse how the macroeconomic aims of economic growth and balance of payments stability
may conflict. [6]

(d) Discuss whether or not a high level of poverty is likely to exist in a market economic system.
[8]

4 In 2021, there were extensions and contractions in demand for a number of South African products.
In that year, a South African court stopped a multinational company (MNC) exploring for oil along
South Africa’s coastline. South Africa experienced an increase in output, driven largely by the growth
in its tertiary sector. However, its unemployment rate was 35%, a long way from full employment.

(a) Define an extension in demand. [2]

(b) Explain two external costs that may be caused by exploring for oil. [4]

(c) Analyse how growth in a country’s tertiary sector can increase its living standards. [6]

(d) Discuss whether or not workers who lose their jobs are likely to stay unemployed for a long
time. [8]

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5 The Peruvian government is under pressure from its industries to improve the country’s transport
system. Peru’s third largest industry is tourism. There are many firms in the Peruvian tourism
industry. Another major industry in Peru is fruit farming. In recent years, trade union membership
in the Peruvian fruit-farming industry has increased.

(a) Identify two examples of labour employed in the tourism industry. [2]

(b) Explain two reasons why countries with a good transport system often have a high GDP. [4]

(c) Analyse the benefits consumers may gain from a competitive market. [6]

(d) Discuss whether or not an increase in trade union membership will benefit an economy. [8]

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Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.

Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.

© UCLES 2024 0455/22/O/N/24

 Cambridge IGCSE™

ECONOMICS0455/01
Paper 1 Multiple Choice For examination from 2027
SPECIMEN PAPER 1 hour

You must answer on the multiple choice answer sheet.

*0123456789*

You will need: Multiple choice answer sheet

Soft clean eraser
Soft pencil (type B or HB is recommended)

INSTRUCTIONS
● There are forty questions on this paper. Answer all questions.
● For each question there are four possible answers A, B, C and D. Choose the one you consider correct
and record your choice in soft pencil on the multiple choice answer sheet.
● Follow the instructions on the multiple choice answer sheet.
● Write in soft pencil.
● Write your name, centre number and candidate number on the multiple choice answer sheet in the
spaces provided unless this has been done for you.
● Do not use correction fluid or tape.
● Do not write on any bar codes.
● You may use a calculator.

INFORMATION
● The total mark for this paper is 40.
● Each correct answer will score one mark.
● Any rough working should be done on this question paper.

This document has 14 pages.

© Cambridge University Press & Assessment 2024 [Turn over

v1
 2

1 A firm produces two types of battery. It supplies car batteries to firms that make electric cars and
laptop batteries to firms that make computers.

What is an example of the basic economic question ‘what to produce’?

A How many car batteries and how many laptop batteries should be manufactured?

B How many workers and how many machines should be used to produce each type
of battery?

C What proportion of batteries should be produced for export and what proportion for
domestic consumers?

D What proportion of recycled materials should be used in the manufacture of the batteries?

2 What is a free good?

A a good for which demand is less than supply

B a good produced using few resources

C a good that has no opportunity cost

D a good that is provided by the state

3 Which factor of production is rewarded with rent?

A capital

B enterprise

C labour

D land

© Cambridge University Press & Assessment 2024 0455/01/SP/27

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4 The diagram shows the demand for smartphones. The initial demand curve is given by
D1 and the initial equilibrium is shown at point E1. Data for internet access has to be
purchased separately.

E2

price E1

E3

D3 D1 D2
O quantity

What is the effect of an increase in the price of data for internet access on the demand
for smartphones?

A a shift of the demand curve to D2

B a shift of the demand curve to D3

C movement along the demand curve to E2

D movement along the demand curve to E3

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5 The initial supply curve of a firm’s good is S1, as shown on the diagram.

S1

S2

price

O quantity

What will cause the supply curve to shift to S2?

A an increase in the number of sick days taken by the firm’s workers

B an increase in the cost of training the firm’s workers

C an increase in the productivity of the firm’s workers

D an increase in the wage rate paid to the firm’s workers

6 A firm reduces the price of its product from $100 to $90. The quantity demanded increases from
1000 to 1500.

What is the price elasticity of demand (PED)?

A –0.1

B –0.2

C –0.5

D –5.0

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7 What can a government analyse through the use of price elasticity of demand (PED)?

A how a change in income tax affects a current account deficit

B how a tax on the production of a good affects tax revenue

C how changes in the rate of interest affect unemployment

D how providing more merit goods affects social welfare

8 A firm cannot obtain the additional raw materials needed to increase production of a good above
50 000 units.

What is the price elasticity of supply (PES) at 50 000 units if the price of the good increases
by 10%?

A 0

B 0.1

C 1
D 10

9 A monopolist uses oil in its production process that causes pollution. The monopolist is efficient at
producing large quantities of its product which is sold at a very low price.

What is the likely cause of market failure?

A abuse of monopoly power

B demerit goods

C diseconomies of scale

D external costs of production

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10 The diagram shows the market for a good. The equilibrium is at point X. The government fixes a
maximum price for the good at P2.

S
P3
X
P1
price
P2
D

O
Q3 Q1 Q2
quantity

What will happen in the market as a result?

A The market equilibrium will remain the same.

B The quantity demanded will fall to Q3.

C There will be excess demand.

D There will be excess supply.

11 Which function does a central bank provide that a commercial bank does not provide?

A acting as the government’s bank

B dealing with foreign exchange

C providing loans to the public

D providing savings accounts for the public

12 Which group of people is most likely to save the largest proportion of their income?

A middle-aged people

B people earning the minimum wage

C people with young children

D young people

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13 When would a trade union be least likely to achieve an increase in the wage rate of
its members?

A when a competitor firm successfully introduces a substitute product

B when labour costs form a low percentage of the firm’s total costs

C when the firm introduces labour-intensive production methods

D when the firm is making large profits

14 The diagram shows the initial demand for labour D1 and supply of labour S1 for a firm. The initial
equilibrium is shown at point X. The government then builds new transport links that connect a
wider population to the firm’s place of work.

What is the new equilibrium point?

S2

S1

A B
S3

wage X
rate
D C D3

D1

D2
O hours worked

15 Which disadvantage is likely to result from increased division of labour within manufacturing?

A For a consumer, there are more handmade goods.

B For a consumer, there is an increase in the quality of goods.

C For an employee, job security will increase.

D For an employee, the nature of their work is less varied.

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16 The owners of a chain of pizza restaurants decide to buy a chain of burger restaurants to
increase revenue.

Which term describes this action?

A horizontal merger

B nationalisation

C privatisation

D vertical merger

17 Why might a government encourage a competitive market?

A Competitive markets create high prices.

B Competitive markets generate large advertising costs.

C Competitive markets prevent innovation.

D Competitive markets provide greater consumer choice.

18 A firm buys new machinery to produce a greater output per machine. The firm trains some of its
workers to operate these machines but makes a larger number of workers unemployed.

What is the effect on the productivity of capital and on the productivity of labour?

productivity of capital productivity of labour

A falls falls
B rises rises
C falls rises
D rises falls

19 The diagrams show the average total cost (ATC) curves of four firms and how they change as
output increases.

Which firm has the lowest fixed costs?

A B C D

ATC
ATC
cost cost cost cost
ATC
ATC
O output O output O output O output

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20 What is true in a monopoly market?

A Consumers enjoy a large variety of product choice.

B Firms with limited finance find it difficult to enter the market.

C High levels of profit are unusual.

D The costs of production are always higher than in a competitive market.

21 What is least likely to be directly affected by the government?

A the interest a firm receives from its money in the bank

B the minimum wage a firm must pay to its workers

C the selection of a new manager at a firm

D the working conditions of employees at a firm

22 Protection of the environment is a key macroeconomic aim.

Which policy measure is most likely to achieve this?

A deregulation that allows factories to be built in rural areas

B investment in transport infrastructure that increases tourism

C regulation that bans the driving of cars in city centres

D subsidising coal power stations to meet the energy needs of electric vehicles

23 The table shows a government’s revenue from taxation.

$m
tax on company profits 100
income tax 600
import duties 30
sales tax 250

What is the total amount raised by indirect taxes?

A $250m

B $280m

C $700m

D $980m

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24 The table shows selected statistics for an economy.

$bn
exports 600
imports 700
government expenditure 550
government revenue 400

What is the government’s budget position in terms of deficit or surplus?

A a deficit of $100 billion

B a deficit of $150 billion

C a surplus of $100 billion

D a surplus of $300 billion

25 What is the most likely result of a fall in interest rates?

A a decrease in household saving

B a decrease in new bank loans

C an increase in labour-intensive production

D an increase in relative poverty

26 What is a supply-side policy measure that aims to increase economic growth?

A raising indirect taxation

B reducing the state retirement age

C removing the limit on maximum working hours

D restricting land available for industrial building

27 A government subsidised the building of new homes in a rural area to increase labour mobility.
It also built a new school. Some people claimed these developments would take land previously
used for farming.

Which concepts are involved in this statement?

A government intervention, monetary policy, public goods

B market disequilibrium, economic growth, resource allocation

C market prices, external benefits, monetary policy

D supply-side policy, factors of production, opportunity cost

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28 What will limit the harmful impact of economic growth on the environment?

A increased clearing of forests to grow more crops for food

B increased pollution as industry expands

C increased use of an economy’s oil and natural gas resources

D increased use of renewable energy resources

29 What is not likely to cause a recession?

A a government reducing its spending

B a natural disaster caused by climate change

C mining a new source of a useful metal

D problems with global supply of raw materials

30 The table shows unemployment and inflation statistics for the United States (US), Japan and
Sweden for year 1 and year 2.

country unemployment (%) inflation (% per annum)

year 1 year 2 year 1 year 2
US 4.8 4.4 5.6 3.4
Japan 2.7 2.7 1.7 0.7
Sweden 2.7 3.2 8.3 6.6

Which conclusion can be made from the table?

A In year 1, the same number of people were unemployed in Sweden and Japan.

B In year 2, the cost of living increased in the US.

C The number of unemployed people increased in all three countries.

D Unemployment and inflation moved in the same direction in Sweden.

31 What is an example of frictional unemployment?

A young people spending time to search for a job after finishing school

B young people taking a three-month holiday between finishing school and starting a job

C young people who cannot find a job because there is a recession in the economy

D young people who have the wrong skills to work in industries that use new technology

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32 Which combination of government policy measures is most likely to reduce unemployment?

A an increase in expenditure on healthcare and subsidies for capital-intensive production

B an increase in expenditure on training and an increase in corporation tax

C an increase in import tariffs and a decrease in interest rates

D an increase in income tax and an increase in quotas on imported goods

33 In the construction of a Consumer Prices Index (CPI), a total weighting of 1000 is used. A weight
of 200 is given to transport and a weight of 100 is given to clothing.

What must be true?

A Clothing prices are rising half as fast as transport prices.

B Consumers spend more on basic needs than on luxury goods.

C Consumers spend twice as much on transport as they do on clothing.

D Transport has the greatest weight of all items in the CPI.

34 When comparing living standards, what makes the Human Development Index (HDI) a more
useful indicator than real Gross Domestic Product (GDP) per head?

A HDI includes a range of measures.

B HDI includes the import and export of goods and services.

C HDI is directly linked to poverty reduction.

D HDI is measured in local currency.

35 The table gives the GDP ($ billions), population (thousands) and GDP per head ($) for selected
countries in a year.

Based on the data, which country has the highest standard of living?

GDP population GDP per head

($bn) (thousands) ($)
A Bangladesh 460 171 186 2 688
B Chile 301 19 604 15 351
C South Africa 406 59 894 6 776
D Trinidad and Tobago 28   1 531 18 289

© Cambridge University Press & Assessment 2024 0455/01/SP/27

 13

36 What is meant by the optimum population for a country?

A a population that consumes the fewest demerit goods

B a population that generates the maximum tax revenue

C a population that has the greatest life expectancy

D a population that produces the maximum output per head

37 What is least likely to be found in a high-income country?

A a low GDP per head and a high level of car ownership

B a low level of labour skills and a high level of employment

C a low rate of adult literacy and a high level of absolute poverty

D a low rate of population growth and a high life expectancy

38 What is not a reason for imposing international trade restrictions?

A to protect consumers from high prices charged by domestic monopoly suppliers

B to protect domestic producers from imported goods priced below the cost of production

C to protect households from imported drugs and harmful products

D to protect the environment from damage and encourage sustainability

39 The price of a good produced in the United States (US) is $10 and this good is exported to South
Africa. The initial foreign exchange rate between the US dollar ($) and South African Rand (ZAR)
is $1 = 20 ZAR. The foreign exchange rate then changes to $1 = 19 ZAR.

How does the price of the good change in South Africa?

change in price (ZAR)

A price decreases by 1 ZAR
B price decreases by 10 ZAR
C price increases by 1 ZAR
D price increases by 10 ZAR

© Cambridge University Press & Assessment 2024 0455/01/SP/27 [Turn over

 14

40 The diagrams show the levels of exports and imports of a country.

exports imports

goods services goods services

50% 50% 60% 40%

total exports $120 million total imports $100 million

What is true for this country?

A Exports of goods are worth $60 million.

B Imports of goods are worth $50 million.

C Exports of services are worth $50 million.

D Imports of services are worth $60 million.

Copyright Acknowledgements:

Question 35 © The World Bank Group; www.worldbank.org; CC BY-4.0; https://creativecommons.org/licenses/by/4.0/

Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (Cambridge University Press & Assessment) to trace copyright holders, but if any items requiring clearance
have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity.

Cambridge International Education is the name of our awarding body and a part of Cambridge University Press & Assessment, which is a department of the
University of Cambridge.

© Cambridge University Press & Assessment 2024 0455/01/SP/27

 Cambridge O Level

ECONOMICS 2281/11
Paper 1 Multiple Choice May/June 2024
45 minutes

You must answer on the multiple choice answer sheet.

*3921790641*

You will need: Multiple choice answer sheet

Soft clean eraser
Soft pencil (type B or HB is recommended)

INSTRUCTIONS
 There are thirty questions on this paper. Answer all questions.
 For each question there are four possible answers A, B, C and D. Choose the one you consider correct
and record your choice in soft pencil on the multiple choice answer sheet.
 Follow the instructions on the multiple choice answer sheet.
 Write in soft pencil.
 Write your name, centre number and candidate number on the multiple choice answer sheet in the
spaces provided unless this has been done for you.
 Do not use correction fluid.
 Do not write on any bar codes.
 You may use a calculator.

INFORMATION
 The total mark for this paper is 30.
 Each correct answer will score one mark.
 Any rough working should be done on this question paper.

This document has 12 pages. Any blank pages are indicated.

06_2281_11_2024_1.1a
© UCLES 2024 [Turn over
 2

1 What is a free good?

A free samples of a new product

B health services provided by the state
C second-hand clothing
D sunlight

2 A firm is deciding whether to produce good X or good Y for the next five years. The predicted
revenue for good X is $20 000 per year and for good Y is $18 000 per year.

What is the opportunity cost of producing good X?

A $18 000 B $20 000 C $90 000 D $100 000

3 The diagram shows a production possibility curve (PPC) for an economy.

good Y
M

O good X

What is the reason for the economy moving from point M to point N?

A decreased unemployment in industries producing good X

B improvement in technology used to produce good X
C increased productivity of workers producing good X
D increased resource allocation to the production of good X

4 What is not held constant when drawing a demand curve for a good or service?

A consumers’ incomes
B tastes and preferences
C the price of substitutes
D the price of the good or service

© UCLES 2024 06_2281_11_2024_1.1a

 3

5 The diagram shows a shift in the supply curve for New Zealand’s airlines from S1 to S2.

S1
price S2

O quantity

What is the most likely cause of this shift?

A a decrease in the costs of New Zealand’s airlines

B a decrease in the number of people wanting to fly to New Zealand
C an increase in the price of train and bus travel in New Zealand
D an increase in the tax on air travel in New Zealand

6 What could cause the price of tea to increase?

A decrease in the demand for tea

B decrease in the price of a substitute good
C increase in the price of a substitute good
D increase in the supply of tea

7 A firm changes the price of its product and finds that its revenue increases.

Which combination of price change and price elasticity of demand would have caused this?

price elasticity
price
of demand

A falls between 0 and 1

B falls equal to 1
C rises between 0 and 1
D rises greater than 1

© UCLES 2024 06_2281_11_2024_1.1a [Turn over

 4

8 What could not occur in a market economic system?

A a monopolist supplying specialist goods to the market

B excessive pollution created by power stations
C governments setting minimum wages to relieve poverty
D private ownership of firms making defence equipment

9 What is a correct definition of a demerit good?

A a good which generates external benefits

B a good with higher private costs than social costs
C a good which is more harmful to consumers than they realise
D a good which provides no costs to third parties

10 Within the same firm, one employee is paid a higher wage than another employee.

Which reason for the difference in their wage could be considered discrimination?

A They are of different ages.

B They have different levels of education.
C They have different levels of productivity.
D They have different levels of work experience.

© UCLES 2024 06_2281_11_2024_1.1a

 5

11 The diagram shows the demand and supply curve of labour for a firm. The initial wage rate is given
by W0 and the equilibrium quantity of labour employed is L0.

A trade union that represents all of the workers negotiates a rise in wage rate to W1.

wage S
rate
W1

W0

O L1 L0 L2
quantity of labour

What is the amount of unemployment that results from this wage rise?

A OL1 B L0L2 C L1L0 D L1L2

12 A farmer introduces machinery to help workers at harvest time. The farmer also reduces the number
of workers by 50%. As a result, the total harvest increases by 25%.

What has happened?

A Labour productivity has decreased and production has decreased.

B Labour productivity has decreased and production has increased.
C Labour productivity has increased and production has decreased.
D Labour productivity has increased and production has increased.

13 A firm has fixed costs of $20 and the following total variable costs.

output 10 20 30 40
total variable costs ($) 40 60 80 100

What happens to average total cost over this output range?

A It falls continuously.
B It falls then rises.
C It rises continuously.
D It rises then falls.

© UCLES 2024 06_2281_11_2024_1.1a [Turn over

 6

14 The table shows the costs and output of a firm.

total cost $10 000

total variable cost $8000

quantity 10

What is the average fixed cost of the firm?

A $200 B $800 C $1000 D $2000

15 A clothing manufacturer expands by taking over a clothing retailer.

Which type of merger is this?

A backward vertical
B conglomerate
C forward vertical
D horizontal

16 What is likely to happen if a previously competitive market becomes a monopoly?

barriers to economies the size of

entry of scale the firm

A decrease decrease increases

B decrease increase decreases
C increase decrease decreases
D increase increase increases

17 Which macroeconomic aim, if achieved, is most likely to increase a government budget surplus?

A full employment
B income redistribution
C low inflation
D balance of payments stability

© UCLES 2024 06_2281_11_2024_1.1a

 7

18 The table shows the income tax rate paid by workers at different levels of income in selected years
for a developed economy.

tax rate year 1 tax rate year 2

income band ($)
(%) (%)
0 to 4999 0 0
5000 to 9999 10 0
10 000 to 19 999 20 10
20 000 to 29 999 30 30
30 000 to 49 999 40 50
50 000+ 40 60

What is most likely to have been the economic objective of the government in changing the tax
rates between year 1 and year 2?

A to reduce a current account deficit

B to reduce income inequality
C to reduce inflation
D to reduce structural unemployment

19 A government attempts to raise economic growth with a policy of reduced interest rates.

Which other government objective is most likely to be helped in the short run?

A lower unemployment
B price stability
C reduced income inequality
D reduced trade deficit

20 What is the definition of a supply-side policy?

A any policy designed to decrease inflation

B any policy designed to decrease unemployment
C any policy designed to increase imports
D any policy designed to increase productivity

© UCLES 2024 06_2281_11_2024_1.1a [Turn over

 8

21 Subsistence farming is the practice of growing crops and raising livestock sufficient only for one’s
own use without any surplus for trade.

Why is it difficult for a government to measure economic growth in an economy based on subsistence
farming?

A Farmers’ families consume most of their own produce.

B Farmers have low rates of saving.
C The size of harvest is dependent on the weather.
D The surplus produce is sold to the government.

22 What is necessary for a worker to be classified as unemployed?

the worker will

the worker does the worker is
accept the
not have a paid prepared to
current wage
job work
rate

A yes no no
B yes no yes
C yes yes no
D yes yes yes

23 What is most likely to increase when the rate of inflation gradually changes from 2% to 8% in one
year?

A the cost of updating existing price lists

B the level of business confidence
C the real income of fixed-income earners
D the real value of consumer debt

24 The introduction of a minimum hourly wage in an industry aims to reduce poverty among low-paid
workers.

What is an advantage to workers of an effective national minimum wage?

A All workers get paid according to their level of productivity.

B Firms may look to increase capital equipment rather than labour.
C Levels of employment become more dependent on wage differences.
D Redistribution of a firm’s income rewards labour rather than owners.

© UCLES 2024 06_2281_11_2024_1.1a

 9

25 The chart shows the population pyramid for a country.

age
female group male
81–90
71–80
61–70
51–60
41–50
31–40
21–30
11–20
0–10
6 4 2 0 0 2 4 6

population / millions

What is most likely to cause the population pyramid to be shaped in this way?

birth rate death rate

A low low
B low high
C high low
D high high

26 The table shows information on four countries.

Which country is likely to be the most developed?

Gross Domestic life

population
Product (GDP) expectancy
(million)
($ billion) (years)

A 100 800 51
B 200 6000 62
C 300 600 48
D 1000 1600 63

© UCLES 2024 06_2281_11_2024_1.1a [Turn over

 10

27 What is an advantage to a firm of specialisation at a national level?

A dependency on supplies from other countries

B greater competition from overseas firms
C greater depletion of the country’s natural resources
D lower average costs due to economies of scale

28 What is an intended outcome of protecting infant industries from free trade?

A to decrease the competitiveness of domestic firms

B to decrease the demand for exported goods
C to increase employment in domestic firms
D to increase the supply of imported goods

29 In the diagram, curves D1 and S1 relate to the demand and supply of the US dollar ($) against
the Chinese yuan.

price of $
(in yuan) S1

P1
P2

D1
D2
O
quantity

What is most likely to cause the demand curve for US dollars to shift from D1 to D2?

A a fall in Chinese interest rates

B a fall in US interest rates
C a faster growth rate in the US economy
D a reduction in the US government budget deficit

© UCLES 2024 06_2281_11_2024_1.1a

 11

30 Brazil had a balance of payments current account deficit of US$23.5 billion.

Which policy is most likely to reduce the current account deficit in Brazil?

A depreciate Brazil’s currency

B reduce rates of income tax in Brazil
C reduce subsidies to Brazil’s exporting firms

D reduce tariffs on Brazil’s imports

© UCLES 2024 06_2281_11_2024_1.1a

 12

BLANK PAGE

Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
Assessment International Education Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download
at www.cambridgeinternational.org after the live examination series.

Cambridge Assessment International Education is part of Cambridge Assessment. Cambridge Assessment is the brand name of the University of Cambridge
Local Examinations Syndicate (UCLES), which is a department of the University of Cambridge.

© UCLES 2024 06_2281_11_2024_1.1a

 Cambridge International Examinations
Cambridge International General Certificate of Secondary Education

ECONOMICS 0455/11
Paper 1 Multiple Choice May/June 2015
45 minutes
Additional Materials: Multiple Choice Answer Sheet
Soft clean eraser
*5498556101*

Soft pencil (type B or HB is recommended)

READ THESE INSTRUCTIONS FIRST

Write in soft pencil.

Do not use staples, paper clips, glue or correction fluid.
Write your name, Centre number and candidate number on the Answer Sheet in the spaces provided
unless this has been done for you.
DO NOT WRITE IN ANY BARCODES.

There are thirty questions on this paper. Answer all questions. For each question there are four possible
answers A, B, C and D.
Choose the one you consider correct and record your choice in soft pencil on the separate Answer Sheet.

Read the instructions on the Answer Sheet very carefully.

Each correct answer will score one mark. A mark will not be deducted for a wrong answer.
Any rough working should be done in this booklet.

This document consists of 11 printed pages and 1 blank page.

IB15 06_0455_11/6RP
© UCLES 2007 [Turn over
 2

1 The following are four ways factors of production are used.

What is likely to require the greatest use of the factor enterprise?

A a carpenter making wooden articles in his leisure time for sale at a monthly market
B a corn farmer negotiating with other farmers to hire expensive machinery
C a food shop owner sometimes selling flowers in the shop
D a householder harvesting vegetables grown at home

2 To help reduce the price of oil, new supplies are needed. However, in 2013, objectors opposed
attempts to explore new sites because of the environmental damage the exploration might cause.

How does this illustrate the basic economic problem?

A Oil is a limited resource.

B Oil is expensive.
C The exploration involves demand and supply.
D There are external costs involved in production.

3 With a given level of resources, an economy that can produce food or computers is at point Q on
its production possibility curve. Population growth means more resources need to be allocated to
food production.

At which point in the short term will the economy be in the diagram?

A Q
output
D
of food C

O output of computers

© UCLES 2015 0455/11/M/J/15

 3

4 A person makes sandwiches at home for five hours each day. She makes 20 sandwiches per
hour, and she sells each sandwich for $2 each.

What is the opportunity cost if she takes a holiday on a working day?

A $2
B $40
C 20 sandwiches
D 100 sandwiches

5 What can be found in a mixed economy but not in a market economy?

A a national economic development plan

B an unequal distribution of income and wealth
C the operation of the price mechanism
D the private ownership of factors of production

6 Newspapers recently reported there had been a decrease in the demand for beef and that its
price per kilogram had increased.

From the initial equilibrium point X, which point in the diagram illustrates the new market
equilibrium?

S2
B
A S1

price S3
X
C
D

D2 D1 D3
O
quantity

© UCLES 2015 0455/11/M/J/15 [Turn over

 4

7 The diagram shows the market for fresh fish in the Caribbean with equilibrium point X.

A new type of fishing boat increases production, which reduces costs.

Which point represents the new equilibrium?

S3
S1
S2
B
A
price X C

D D2
D1

O quantity

8 A large supermarket applied to build on land which was in an area of natural beauty. The local
government allowed the building, even though the natural beauty of the area would be lost,
because many jobs would be created and much needed income would be brought to the local
community.

Which economic ideas cannot be found in the above statement?

A external cost and private enterprise

B free market and the conservation of resources
C opportunity cost and improved standards of living
D public sector and external benefit

9 Cigarettes have been used as money in exceptional circumstances.

What is the most likely reason that they are not acceptable as money in normal circumstances?

A cigarettes lack durability

B cigarettes lack intrinsic value
C cigarettes lack portability
D cigarettes lack uniformity

© UCLES 2015 0455/11/M/J/15

 5

10 The table shows a country’s trade union membership in millions between 2008 and 2011.

trade union trade union

members in the members in the
year
private sector public sector
(millions) (millions)

2008 8.4 3.6

2009 6.6 4.2
2010 5.1 6.0
2011 3.4 7.1

What can be concluded about the country’s trade union membership in the period 2008 to 2011?

A Trade unions had least members in 2010.

B Trade unions had most members in 2011.
C Trade union membership fell between 2008 and 2009.
D Trade union membership rose between 2009 and 2011.

11 A bus driver works longer hours if the wage rate increases. As his earnings increase there
reaches a point when he prefers more leisure to work.

Which supply curve, S, represents this situation?

A B C D
S S

wage S wage wage wage

S
rate rate rate rate

O worker O worker O worker O worker

hours hours hours hours

12 In 2013, a German company that manufactured medicines bought a UK company that ran a chain
of pharmacies that sold medicines.

What term best describes this takeover?

A conglomerate
B horizontal
C vertical integration backwards
D vertical integration forwards

© UCLES 2015 0455/11/M/J/15 [Turn over

 6

13 When is a firm considered more capital-intensive than another firm?

A when it has a lower ratio of workers to machines than the other firm
B when it has fewer workers than the other firm
C when it has higher variable costs than the other firm
D when it has more machines than the other firm

14 In 2009, Gulf Airlines, which was making a loss, stated it would reduce the number of new aircraft
on order.

If it did this, which of its costs would be directly affected?

A fixed costs
B marginal costs
C opportunity costs
D variable costs

15 The diagram shows the costs of a firm.

60

50

40
cost
($ 000s) 30

20

10

0
100
output

What is the firm's total variable cost at an output of 100 units?

A $100 B $500 C $10 000 D $50 000

© UCLES 2015 0455/11/M/J/15

 7

16 A government lowers the rate of interest.

Who is most likely to be disadvantaged by this policy?

A house buyers
B manufacturers
C retailers
D savers

17 Which is a supply-side policy that would increase output in the long-run?

A an increase in benefit payments

B an increase in places at training colleges
C an increase in the rate of income tax
D an increase in the rate of tax employers pay

18 Russia exports wheat. In 2010, a bad harvest led the Russian government to prevent the export
of wheat, to ensure enough supplies were kept for domestic use.

What was the most likely outcome of the government’s action?

A prices were fixed by the wheat producers

B the amount produced was determined by the government
C the price of wheat abroad fell
D there was a redistribution of domestic production

19 The government reduces the rate of income tax and increases the rate of tax on producers.

From the initial equilibrium point X, which letter indicates the new equilibrium point in the market?

S2
B
A S1

price S3
X
C
D

D2 D1 D3
O
quantity

© UCLES 2015 0455/11/M/J/15 [Turn over

 8

20 What is most likely to cause economic growth?

A a better educated workforce

B a reduction in the right to own property
C decreased wages
D higher taxation

21 A worker earns $250 each week, which leaves a disposable income of $175.

What will affect the real value of the worker’s $250 earned income?

A a change in government spending

B a change in interest rates
C a change in the price level
D a change in the tax rate

22 The table shows the unemployment rate in three developed economies in June 2013.

United States 7.6

Sweden 8.2
France 10.9

What is the main cause of high rates of unemployment in developed economies in periods of
recession?

A decreases in total demand

B movement of labour between countries
C reduced levels of technological change
D regional inequalities of wealth

© UCLES 2015 0455/11/M/J/15

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23 From 2012 to 2013, European economies experienced weak economic growth.

Based on the information on GDP, industrial production and unemployment in the table, which
economy performed worst?

Percentage change 2012-2013

industrial
GDP unemployment
production

A UK +1.0 –2.3 –0.1

B Germany +0.3 –1.1 0.0
C Italy –1.8 –4.2 +1.5
D Spain –1.7 –1.3 +1.3

24 What is not a reason why the average size of families is likely to be greater in developing
countries than in developed countries?

A Children offer the prospect of security in old age.

B Government child care support is widely available.
C Means of birth control are less available and more expensive.
D Women are less likely to be part of the workforce.

25 The table shows the proportion of GDP produced by each sector of production in three fictitious
countries.

Farland Highland Lowland

(% of GDP) (% of GDP) (% of GDP)

primary sector 30 10 35
secondary sector 20 60 25
tertiary sector 50 30 40

What can be concluded from the table?

A Farland is the least developed economy.

B Highland is the most developed economy.
C It is uncertain which is the most developed economy.
D Lowland is the least developed economy.

© UCLES 2015 0455/11/M/J/15 [Turn over

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26 In rural areas in developing countries, farmers grow food for their own consumption.

Why might this mean that the GDP is a weak measure of the standard of living in those
countries?

A The food grown is not exported.

B The GDP does not include agricultural production.
C The GDP only refers to the public sector.
D The value of the food is unknown.

27 The charts show the population structure of a country in 1960 and 2010.

age age
85+ 85+
80-84 80-84
75-79 75-79
male 70-74 female male 70-74 female
65-69 65-69
60-64 60-64
55-59 55-59
50-54 50-54
45-49 45-49
40-44 40-44
35-39 35-39
30-34 30-34
25-29 25-29
20-24 20-24
15-19 15-19
10-14 10-14
5-9 5-9
0-4 0-4
3 2 1 0 0 1 2 3 3 2 1 0 0 1 2 3
millions millions

1960 2010

During this period, how did birth and death rates change?

birth rates death rates

A fell fell
B fell no change
C rose fell
D rose no change

© UCLES 2015 0455/11/M/J/15

 11

28 What is an advantage of international specialisation?

A choice is limited
B countries become overdependent on each other
C resources are used more efficiently
D transport costs are decreased

29 Skin creams preventing sunburn made in the European Union (EU) are more effective than those
made in the United States (US). US tourists stock up on the creams when visiting Europe. Such
creams are banned from production in the US because of the chemicals in them. In 2013,
negotiations began to remove this ban in order to allow production in the US.

How is this freer trade likely to affect manufacturers of skin creams in the US and the EU?

manufacturers manufacturers
in the US in the EU

A gain gain
B gain lose
C lose gain
D lose lose

30 The table shows the trade in goods balance and the current account balance of the balance of
payments for four countries during a year.

Which country had the largest surplus on its trade in services, assuming no other transfers or
income flows?

trade in goods current account

country balance balance
($ billion) ($ billion)

A Hong Kong 6.2 6.2

B Indonesia 4.4 4.3
C Mexico 7.8 7.6
D Singapore 5.3 5.4

© UCLES 2015 0455/11/M/J/15

 12

BLANK PAGE

Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every
reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the
publisher will be pleased to make amends at the earliest possible opportunity.

To avoid the issue of disclosure of answer-related information to candidates, all copyright acknowledgements are reproduced online in the Cambridge
International Examinations Copyright Acknowledgements Booklet. This is produced for each series of examinations and is freely available to download at
www.cie.org.uk after the live examination series.

Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local
Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge.

© UCLES 2015 0455/11/M/J/15