Cambridge IGCSE Economics 0455 — 2020 Oct/Nov Paper 1 · Variant 2

Question 1

1 What causes economic agents to make choices? A limited needs and wants B the existence of finite resources C the existence of free goods D the market mechanism

Accepted Answer

B

Question 2

2 Which combination of a factor of production and its factor income is not correct? factor of factor income production A capital interest B enterprise profit C labour dividends D land rent

Accepted Answer

C

Question 3

3 The diagram shows a production possibility curve (PPC) for a country. The country moved from position X to position Y on the PPC. capital goods X Y O consumer goods What is the most likely reason for this change? A Firms have decided to increase investment in technology. B New economic resources have been discovered in the country. C The government has brought about an increase in living standards. D The government has encouraged long-term economic growth.

Accepted Answer

C

Question 4

4 What is an example of a macroeconomic aim? A to create and maintain full employment B to improve efficiency in the manufacturing sector of the economy C to provide consumers with greater information when buying goods and services D to encourage greater occupational mobility of labour

Accepted Answer

A

Question 5

5 Why might a market economy fail to achieve the best use of scarce resources? A Consumers may lack information about which good to buy. B Demerit goods are underconsumed. C Public goods are overconsumed. D Most resources are owned by the government.

Accepted Answer

A

Question 6

6 The diagram shows the global market for copper with an equilibrium point of X. Which point represents the new equilibrium after the copper producers’ costs increase and there is rapid global economic growth? price S2 S1 A S3 D X B C D2 D1 D3 O quantity

Accepted Answer

A

Question 7

7 The diagram shows the supply curve for a good. price ($) S 12 10 0 100 140 quantity (units) What is the price elasticity of supply when the price rises from $10 to $12? A 0.5 B 0.75 C 1.4 D 2.0

Accepted Answer

D

Question 8

8 Which task is not a function of a trade union? A agreeing the minimum number to be employed on a particular job B deciding on the level of a national minimum wage C negotiating working hours and conditions of work D providing legal advice on unfair dismissal

Accepted Answer

B

Question 9

9 What does not have an effect on wages in a free market economy? A danger levels in the workplace B government regulations C the number of people willing and able to work D the years of training required

Accepted Answer

B

Question 10

10 The table shows how household spending changes with income. income spending ($ per month) ($ per month) 3000 3150 3300 3375 3600 3500 3900 3825 4200 4050 4500 4275 What is the lowest level of income at which savings are positive? A $3000 B $3600 C $3900 D $4200

Accepted Answer

B

Question 11

11 What can a central bank increase in order to reduce consumer borrowing? A  commercial bank deposits B  government spending C  the exchange rate D  the rate of interest

Accepted Answer

D

Question 12

12 The table shows the output and total costs of a small firm. output total costs (units) ($) 0 50 000 1 000 100 000 5 000 400 000 10 000 600 000 What is the average fixed cost of producing 10 000 units? A $5 B $6 C $55 D $60

Accepted Answer

A

Question 13

13 A firm has fixed costs of $1000. The table shows the variable cost at different levels of output. output (units) 1 2 3 4 variable cost ($) 100 190 270 350 If the goods are sold for $500 each, how much profit will be made from the sale of 4 units? A $650 B $1000 C $1650 D $2000

Accepted Answer

A

Question 14

14 Firm X supplies bricks and decides to merge with firm Y that also supplies bricks. Which form of merger has taken place? A backward vertical B conglomerate C forward vertical D horizontal

Accepted Answer

D

Question 15

15 Who owns a public sector organisation? A individuals B shareholders C specialist managers D the government

Accepted Answer

D

Question 16

16 What are two aims that a government normally pursues when managing the performance of the whole economy? A to encourage an increase in production and to prevent high inflation B to ensure no one is unemployed and to reduce exports C to give everyone equal incomes and to increase government revenue D to protect the environment and to reduce interest rates

Accepted Answer

A

Question 17

17 What is most likely to be the responsibility of a central government? A the provision of immigration officials at an airport B the provision of security cameras in a shopping centre C the provision of security staff at a bank D the provision of ticket inspectors on a train

Accepted Answer

A

Question 18

18 The table shows the tax that an individual would pay at different levels of disposable income. disposable 10 000 20 000 30 000 40 000 income ($) tax ($) 0 2000 4000 6000 Which type of tax is shown in the table? A corporation tax B indirect tax C progressive tax D regressive tax

Accepted Answer

C

Question 19

19 The government wants to reduce the consumption of cigarettes. Which policy would be most likely to do this? A increasing a subsidy on cigarettes B increasing income tax C increasing interest rates D increasing the indirect tax on cigarettes

Accepted Answer

D

Question 20

20 Which group should not be included in the measurement of unemployment? A redundant unskilled workers seeking alternative work B seasonal agricultural workers in out-of-season periods C students over 18 years continuing with full-time education D those who have left school and cannot get a job

Accepted Answer

C

Question 21

21 The table shows the rates of unemployment and real GDP growth for an economy in 2014 and 2018. 2014 2018 rate of 3 10 unemployment (%) rate of real GDP 4 –2 growth (%) Which combination of policy measures would be most effective in returning the economy to the 2014 level of economic activity? A a decrease in direct taxes and an increase in the rate of interest B a decrease in government expenditure and an increase in the rate of interest C an increase in direct taxes and a decrease in the rate of interest D an increase in government expenditure and a decrease in the rate of interest

Accepted Answer

D

Question 22

22 An economy is experiencing rising prices. Which government policy will help reduce consumer expenditure? A introducing compulsory saving for income earners B investing more in building infrastructure C issuing more banknotes and coins D reducing indirect taxes

Accepted Answer

A

Question 23

23 Some goods take a greater percentage of a typical household’s total spending than others. How is this accounted for in the construction of a consumer prices index? A by deducting the goods B by giving a weight to the goods C by taking an average of price fluctuations during a year D by using the price elasticity of demand for the goods

Accepted Answer

B

Question 24

24 In countries with absolute poverty, low incomes can start a process that keeps incomes low. What are the stages of this process? A low incomes  low consumption  low prices  low output  low incomes B low incomes  low government spending  high taxation  low employment  low incomes C low incomes  low investment  high profits  low dividends  low incomes D low incomes  low saving  low investment  low productivity  low incomes

Accepted Answer

D

Question 25

25 Which factor in the world’s low-income countries limits their economic development? A balance of payments surpluses B high saving ratios C large inflows of foreign investment D rapid population growth

Accepted Answer

D

Question 26

26 The table shows the percentage employment in the primary, secondary and service sectors in four countries. Which country is likely to be the most developed? percentage employment primary secondary service country sector sector sector A 10 35 55 B 20 60 20 C 35 35 30 D 40 40 20

Accepted Answer

A

Question 27

27 What causes the birth rate to fall in a country? A Fewer women work. B Infant mortality rates rise. C Medical supplies and healthcare improve. D The optimum population increases.

Accepted Answer

C

Question 28

28 A country wishes to increase a current account surplus on the balance of payments. Which action would it take? A abolish an import quota B increase import tariffs C remove export subsidies D tax export producers

Accepted Answer

B

Question 29

29 The table shows a country’s exports and imports. $m exports of goods 200 imports of goods 190 exports of services 35 imports of services 38 What was the country’s balance of trade in goods and services? A a deficit of $7 million B a deficit of $13 million C a surplus of $7 million D a surplus of $13 million

Accepted Answer

C

Question 30

30 The diagram shows the value of a country’s exports and imports of goods over five years. 30 $m 25 key 20 exports of goods 15 imports of goods 10 5 0 1 2 3 4 5 year Between which two years did the country have an increase in the value of imports and an improvement in its balance of trade in goods? A 1 and 2 B 2 and 3 C 3 and 4 D 4 and 5

Accepted Answer

C

Cambridge IGCSE Economics 0455 — 2020 Oct/Nov Paper 1 · Variant 2

Question paper12 pages

Mark scheme3 pages

Questions as text

Q1 · What causes economic agents to make choices?

Q2 · Which combination of a factor of production and its factor income is not correct?

Q3 · The diagram shows a production possibility curve (PPC) for a country

Q4 · What is an example of a macroeconomic aim?

Q5 · Why might a market economy fail to achieve the best use of scarce resources?

Q6 · The diagram shows the global market for copper with an equilibrium point of X

Q7 · The diagram shows the supply curve for a good

Q8 · Which task is not a function of a trade union?

Q9 · What does not have an effect on wages in a free market economy?

Q10 · The table shows how household spending changes with income

Q11 · What can a central bank increase in order to reduce consumer borrowing?

Q12 · The table shows the output and total costs of a small firm

Q13 · A firm has fixed costs of $1000

Q14 · Firm X supplies bricks and decides to merge with firm Y that also supplies bricks

Q15 · Who owns a public sector organisation?

Q16 · What are two aims that a government normally pursues when managing the performance of the…

Q17 · What is most likely to be the responsibility of a central government?

Q18 · The table shows the tax that an individual would pay at different levels of disposable…

Q19 · The government wants to reduce the consumption of cigarettes

Q20 · Which group should not be included in the measurement of unemployment?

Q21 · The table shows the rates of unemployment and real GDP growth for an economy in 2014 and…

Q22 · An economy is experiencing rising prices

Q23 · Some goods take a greater percentage of a typical household’s total spending than others

Q24 · In countries with absolute poverty, low incomes can start a process that keeps incomes low

Q25 · Which factor in the world’s low-income countries limits their economic development?

Q26 · The table shows the percentage employment in the primary, secondary and service sectors…

Q27 · What causes the birth rate to fall in a country?

Q28 · A country wishes to increase a current account surplus on the balance of payments

Q29 · The table shows a country’s exports and imports

Q30 · The diagram shows the value of a country’s exports and imports of goods over five years

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