Cambridge IGCSE Economics 0455 — 2023 May/June Paper 1 · Variant 2
0455/12/M/J/23 · 30 questions · 30 marks · ≈34 min
The question paper and its mark scheme, free to read here and free to download. This is Cambridge’s own paper, exactly as it was sat.
Question paper12 pages
Mark scheme3 pages
Answers below. Sit the paper first if you are practising.
Questions as text
Q1 · What is part of the economic definition of scarcity?
1 What is part of the economic definition of scarcity? A high levels of taxation B low levels of investment C unequal distribution of income D unlimited consumer wants
Mark scheme: D
Q2 · A country’s production possibility curve (PPC) moves from PPC1 to PPC2
2 A country’s production possibility curve (PPC) moves from PPC1 to PPC2. consumer goods PPC1 PPC2 O capital goods What could cause this movement in the PPC? better higher lower education investment unemployment A false false true B false true false C true false true D true true false
Mark scheme: D
More questions on Production possibility curve (PPC) diagrams
Q3 · A government spends $100m on subsidising wind farm construction instead of spending it on…
3 A government spends $100m on subsidising wind farm construction instead of spending it on an increase in healthcare. Which economic concept does this spending decision illustrate? A external cost B free goods C market disequilibrium D opportunity cost
Mark scheme: D
Q4 · What is an example of a macroeconomic indicator?
4 What is an example of a macroeconomic indicator? A agricultural prices B average earnings in the secondary sector C real Gross Domestic Product (real GDP) D total costs of German pharmaceutical firms
Mark scheme: C
Q5 · Good X is demanded in two areas, Y and Z
5 Good X is demanded in two areas, Y and Z. The table shows the amount of X demanded in these areas at different prices. price of quantity demanded good X per month (US$) area Y area Z 5 1000 200 10 800 150 15 600 100 20 400 50 25 200 0 What can be concluded from the table? A Consumers in area Y are more willing and able than consumers in area Z to buy good X. B Consumers in area Y are richer than consumers in area Z. C Consumers in area Y want the good more than consumers in area Z. D There are more consumers living in area Y than in area Z.
Mark scheme: A
Q6 · Which price elasticity of demand (PED) would cause an increase in total revenue if the…
6 Which price elasticity of demand (PED) would cause an increase in total revenue if the price of the good increased? A perfectly elastic B relatively elastic C relatively inelastic D unitary elastic
Mark scheme: C
Q7 · The diagram shows the supply curve for coffee
7 The diagram shows the supply curve for coffee. supply price P2 P1 O Q1 Q2 quantity The price of coffee increases from P1 to P2. How would this benefit firms in the coffee industry? A A higher price gives firms the ability to increase profits. B A higher price gives firms the incentive to reduce total fixed costs. C A higher price will encourage consumers to buy more coffee increasing total revenue. D A higher price will encourage less firms to enter the market to supply coffee.
Mark scheme: A
Q8 · What might be an external benefit of an increase in the number of university graduates in…
8 What might be an external benefit of an increase in the number of university graduates in an economy? A an increase in revenue for the universities from fee-paying students B an increase in tax revenue from a more productive labour force C an increase in graduate employment as a percentage of the working population D an increase in wages for graduates
Mark scheme: B
Q9 · The price of a good increases
9 The price of a good increases. What could cause this? A The cost of raw materials falls. B The incomes of consumers rise. C The price of a complement rises. D The price of a substitute falls.
Mark scheme: B
Q10 · Imposing a maximum price for a good is an example of which type of government policy?
10 Imposing a maximum price for a good is an example of which type of government policy? A fiscal B monetary C regulation D supply-side
Mark scheme: C
Q11 · Savers suffer as inflation rises to 4.4%
11 Savers suffer as inflation rises to 4.4%. Which function of money is most involved in this statement? A means of deferred payments B medium of exchange C store of value D unit of account
Mark scheme: C
Q12 · One of the functions of money is to act as a measure of value
12 One of the functions of money is to act as a measure of value. What does this mean? A Money allows people to borrow and lend. B Money allows people to save their surplus income. C Money is used to buy goods and services. D Money is used to compare the worth of different goods and services.
Mark scheme: D
Q13 · Which trade union activity will be beneficial for firms?
13 Which trade union activity will be beneficial for firms? A balloting for industrial action to prevent redundancies B campaigning to raise wages of trade union members C instructing workers to strike over a safety dispute D providing training which raises productivity of workers
Mark scheme: D
Q14 · What is not a variable cost of production?
14 What is not a variable cost of production? A cost of fuel B cost of raw materials C extra pay for working additional hours D rent of offices
Mark scheme: D
Q15 · What is a definition of a firm’s revenue?
15 What is a definition of a firm’s revenue? A money received from sales B sales volume C surplus over costs D tax payments
Mark scheme: A
Q16 · What could cause internal diseconomies of scale for a firm?
16 What could cause internal diseconomies of scale for a firm? A a fall in demand for the products produced by the firm B a merger with another firm that results in slower decision-making C spending more on research and development to create new products D the lack of skilled labour in the geographical area where the firm is based
Mark scheme: B
Q17 · A government decides to leave direct taxes unchanged but to increase indirect taxes
17 A government decides to leave direct taxes unchanged but to increase indirect taxes. What is this policy intended to achieve? A to increase the value of the exchange rate B to redistribute income from higher to lower income groups C to reduce a budget deficit D to reduce the rate of inflation
Mark scheme: C
Q18 · What is the most likely reason to increase government subsidies?
18 What is the most likely reason to increase government subsidies? A to decrease consumption of a merit good B to increase consumption of a merit good C to decrease consumption of a demerit good D to increase consumption of a demerit good
Mark scheme: B
Q19 · Which people are most likely to gain at a time of inflation?
19 Which people are most likely to gain at a time of inflation? A companies who sell abroad B foreign tourists visiting the country C those living on their savings D those who are repaying borrowed money
Mark scheme: D
Q20 · The government of country Z announces an increase in spending on work-place training
20 The government of country Z announces an increase in spending on work-place training. What is the effect of this supply-side policy likely to be? A a decrease in country Z’s employment rate B a decrease in country Z’s exchange rate C an increase in country Z’s economic growth rate D an increase in country Z’s interest rate
Mark scheme: C
Q21 · The table shows real GDP in US$ billion for a country over a three-year period
21 The table shows real GDP in US$ billion for a country over a three-year period. real GDP year US$ billion 1 205 2 215 3 219 What does the GDP data indicate for the country between year 1 and year 3? A a reduction in the rate of inflation B an increase in the rate of economic growth C the existence of economic growth D the existence of economic growth per capita
Mark scheme: C
Q22 · What is a likely consequence of a falling level of unemployment?
22 What is a likely consequence of a falling level of unemployment? A downward pressure on wage rates B increase in welfare benefit payments C rise in absolute poverty D rise in income tax revenue
Mark scheme: D
Q23 · The diagrams show Italy’s unemployment rate and GDP per head
23 The diagrams show Italy’s unemployment rate and GDP per head. Italy’s unemployment rate Italy’s GDP per head 13 39 000 % $ 38 000 11 37 000 9 36 000 35 000 7 34 000 5 33 000 2000 2005 2010 2015 2000 2005 2010 2015 year year When do Italy’s unemployment rate and GDP per head rise at the same time? A 2000–2001 B 2007–2008 C 2009–2010 D 2014–2015
Mark scheme: B
Q24 · During a recession, many people in a city become unemployed and their incomes fall
24 During a recession, many people in a city become unemployed and their incomes fall. Some people can no longer pay the rent on their houses or buy the food they need. What is the effect of the recession in the city? absolute poverty relative poverty A increases increases B increases unchanged C unchanged increases D unchanged unchanged
Mark scheme: A
Q25 · The Peruvian government set itself the target of reducing the number of its population in…
25 The Peruvian government set itself the target of reducing the number of its population in poverty. What change does not indicate that the Peruvian government had made progress towards this target? A a rise in employment B a rise in infant mortality C a rise in life expectancy D a rise in the level of adult literacy
Mark scheme: B
Q26 · What is not a reason for the decline in manufacturing industries in developed economies…
26 What is not a reason for the decline in manufacturing industries in developed economies in recent years? A growth of newly industrialised competitor countries B invention of automated production methods C rising costs of factor inputs in the steel industry D considerable skill shortages as school-leavers prefer to work in the service sector
Mark scheme: B
Q27 · The table shows a country’s exports and imports
27 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 $7million B a deficit of $13million C a surplus of $7million D a surplus of $13million
Mark scheme: C
Q28 · Country X exports steel to country Y at a price below its cost of production
28 Country X exports steel to country Y at a price below its cost of production. This has led to a fall in demand for steel produced in country Y. What is a method of trade protection that country Y could use to reduce the imports of steel from country X? A apply anti-dumping tariffs B increase interest rates C revalue the currency D subsidise the export of steel
Mark scheme: A
Q29 · What would increase the demand for a country’s currency on the foreign exchange market?
29 What would increase the demand for a country’s currency on the foreign exchange market? A a decrease in its inward investment B a decrease in its rate of interest C an increase in its exports D an increase in its imports
Mark scheme: C
Q30 · Country X has a persistent deficit on the current account of the balance payments
30 Country X has a persistent deficit on the current account of the balance payments. Which policy measure is most likely to improve this situation? A lowering import quotas B lowering income tax C lowering import tariffs D lowering export subsidies
Mark scheme: A
What was in this paper
The subtopics covered by these 30 questions, and how many questions each got. Open one in a new tab to see every Cambridge question on it.
2Economic growth2Firms and production2Firms’ costs, revenue and objectives2Market failure2Money and banking2Poverty2Demand1Employment and unemployment1Fiscal policy1Foreign exchange rates1Globalisation, free trade and protection1Inflation and deflation1Opportunity cost1Price changes1Price elasticity of demand (PED)1Production possibility curve (PPC) diagrams1Supply1Supply-side policy1The macroeconomic aims of government1The nature of the economic problem1The role of government1Trade unions1What you needed in this session
Cambridge’s own grade thresholds for 2023 May/June, Paper 1 · Variant 2. A higher threshold means an easier paper — the bar moves with how the cohort did.