Econ MCQ

Cambridge IGCSE™
ECONOMICS 0455/11
Paper 1 Multiple Choice May/June 2020
45 minutes
You must answer on the multiple choice answer sheet.

*4018684555*
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. A mark will not be deducted for a wrong answer.
• Any rough working should be done on this question paper.
This document has 12 pages. Blank pages are indicated.
IB20 06_0455_11/3RP
© UCLES 2020 [Turn over
2
1 What is an example of the purchase of a consumer good?
A A farm owner buys a television.

B A farm owner buys additional land.
C A farm owner buys fertiliser for their crops.
D A farm owner buys some farming equipment.
2 What is the function of the factors of production in an economy?
A to make goods and services to fulfil wants and needs

B to provide an even distribution of income
C to provide tax income for the government
D to reduce the existence of external costs
3 The diagram shows a production possibility curve (PPC) for an economy that can produce cotton
and cars. The economy is at point Q.
W
output Z
of cotton
Q X
O
output of cars
There is improved technology that can only be used in the production of cars.
How would this be represented on this diagram?
A by a movement from Q to W
B by a movement from Q to X
C by a movement from Q to Y
D by a movement from Q to Z
© UCLES 2020 0455/11/M/J/20

3
4 Which topic is included in microeconomics?
A economic growth
B elasticity of demand
C inflation
D the balance of payments
5 What aspect of demerit goods means they are overproduced?
A clear product information

B high external costs
C high product taxes
D low customer demand
6 The diagram shows market demand and supply curves.
S1
P2
price
P1
P3
D1
O Q2 Q3 Q1 Q4 Q5
quantity
To what extent is the market in disequilibrium at price P3?
A OQ1 – OQ2 B OQ1 – OQ3 C OQ2 – OQ4 D OQ3 – OQ5
7 Lithium is an essential metal for the production of electric cars. Following a 10% increase in the
price of lithium, supplies increase by 15%. This led to a 5% increase in the price of
electric cars.
What is the price elasticity of supply (PES) for lithium?
A 0.33 B 0.66 C 1.50 D 2.0
© UCLES 2020 0455/11/M/J/20 [Turn over

4
8 The wage of labour in a firm increases.
What is the most likely effect on the production process?
A Capital replaces labour immediately.

B Capital replaces labour in the long run.
C Labour replaces capital immediately.
D Labour replaces capital in the long run.
9 Which combination of influences would increase the level of borrowing by a household?
influence 1 influence 2
A becoming pensioners higher rate of inflation

B greater wealth lower consumer confidence
C higher consumer confidence lower rate of interest
D higher rate of interest greater availability of credit
10 The graph shows women’s wages as a percentage of men’s wages in year 1 and year 2.
85
percent 80
75 year 2
70
65
year 1
60
55
27 30 35 40 45 50 55 60 62
age
Which statement is shown by the graph to be true?
A Younger women earn more than older women.

B Women’s wages remain about the same between the ages of 40–50.
C In year 2, all women were earning more than men.
D In year 2, women were earning a higher percentage of men’s wages than in year 1.
© UCLES 2020 0455/11/M/J/20

5
11 People’s income decreases.
How is the proportion spent on food and leisure likely to change?
food leisure
A decrease decrease
B decrease increase
C increase decrease
D increase increase
12 The table shows total fixed and total variable costs at different levels of output for a firm.
At which level of output is average total cost lowest?
total total
output
fixed cost variable cost
(tonnes)
($) ($)
A 100 1200 1200

B 200 1200 2000
C 300 1200 2700
D 400 1200 3600
13 The following information refers to a firm producing shoes.
At which level of output does the firm maximise profits?
total output of total cost total revenue

pairs of shoes ($) ($)
A 100 1000 1300

B 200 1800 2200
C 300 2700 3000
D 400 3200 3400

6
14 What is most likely to lead to an improvement in labour productivity in an industry?
A an increase in capital investment

B an increase in income tax rates
C an increase in the demand for the industry’s product
D an increase in the number of firms in the industry
15 How is a government most likely to prevent the growth of monopolies?
A by encouraging mergers in the private sector

B by establishing nationalised industries
C by promoting the benefits of economies of scale
D by reducing barriers to entry into an industry
16 What is not included in public expenditure?
A capital spending by firms

B interest payments on government borrowing
C investment in defence by the central government
D subsidies to bus companies from local government
17 When is the budget described as balanced?
A when direct taxes and indirect taxes are equal

B when exports and imports are equal
C when government spending and government revenue are equal
D when the demand for money and the supply of money are equal
18 The government wishes to increase economic growth in its economy.
What would not be likely to achieve this aim?
A The central bank encourages bank lending.

B The central bank lowers interest rates.
C The government increases sales tax (VAT).
D The government subsidises new industries.
© UCLES 2020 0455/11/M/J/20

7
19 The government redistributes income more evenly.
What is most likely to increase?
A the incentive to work

B the level of savings
C the need for welfare payments
D the rate of inflation
20 The table shows selected indicators for the labour market of an economy in 2014 and 2018.
2014 2018
(millions) (millions)
total labour force 30 30

employed workers 25 28
long-term unemployed 1 2
employment in manufacturing 4 2
employment in services 13 16
According to the table, what is the most likely type of unemployment in 2018?
A cyclical
B frictional
C seasonal
D structural
21 What may directly cause economic growth?
A higher imports
B higher levels of resources
C higher taxation
D higher unemployment
22 What would not be required in the construction of an index of consumer prices?
A the selection of a base year

B the selection of a representative range of items
C the calculation of average wage levels
D the weighting of each item in the index

8
23 The table gives information about three economic indicators in four countries.
rate of rate of rate of

inflation interest unemployment
% % %
country W 1.4 3.4 10.2

country X 3.7 8.7 12.3
country Y 3.6 7.3 14.2
country Z 2.1 6.0 7.7
What may be concluded from this information?
A Countries with higher inflation have higher interest rates.

B Countries with higher interest rates have lower unemployment.
C The country with the lowest inflation had the highest unemployment.
D The country with the lowest unemployment had the lowest inflation.
24 What distinguishes a more developed country from a less developed country?
A Inflation rates are higher in the more developed country.

B Interest rates are higher in the more developed country.
C Natural resources are higher in the more developed country.
D Real incomes are higher in the more developed country.
25 An additional 700 000 UK children and pensioners fell into relative poverty between 2013 and
2017.
What might be the reason for this?
A Direct taxes had increased, and indirect taxes had fallen.

B Real gross domestic product was rising faster than the population.
C The death rate was exceeding the birth rate.
D The real value of government welfare benefits had fallen.
© UCLES 2020 0455/11/M/J/20

9
26 Which changes usually result when a country develops and is able to provide free healthcare and
good living conditions?
labour
birth rate death rate
productivity
A falls falls rises

B falls rises falls
C rises falls falls
D rises rises rises
27 What is a quota in international trade?
A a government grant to encourage production

B an administrative and technical barrier
C a limit on the quantity of imports
D a tax on imports
28 Many low-income countries rely on exports of raw materials such as coffee or iron ore to earn
them foreign currency.
What is a disadvantage of this?
A Countries have a constant demand for raw materials.

B International trade only benefits the importing countries.
C It is necessary for low-income countries to belong to a free trade area.
D Raw materials have fluctuating prices.
29 What is included as part of the current account of the balance of payments?
A all government income and expenditure

B money withdrawn from a bank account
C investments in other countries by manufacturers
D trade in goods and services

10
30 The table shows components of Japan’s current account balance in trillion Yen (¥) for 2011 and
2012.
balance of balance of balance of

balance of goods
year services primary income secondary income
¥ trillion
¥ trillion ¥ trillion ¥ trillion
2011 –1.61 –1.76 14.04 –1.11

2012 –5.23 –2.33 13.55 –1.02
Which balance improved between 2011 and 2012?
A balance of goods
B balance of services
C balance of primary income
D balance of secondary income
© UCLES 2020 0455/11/M/J/20

Cambridge IGCSE™
ECONOMICS 0455/12
45 minutes

*0782155617*

Soft clean eraser
INSTRUCTIONS
INFORMATION
IB20 06_0455_12/3RP
2
1 In 2016, 20 billion barrels of oil and 1.6 billion barrels of natural gas were discovered in Texas,
US.
Which factor of production has increased in the US due to this discovery?
A capital
B enterprise
C labour
D land
2 The diagram shows a production possibility curve (PPC).
Which of these points shows the largest possible output of product Y currently achievable?
product Y
A
B
C
O
product X
3 A student decides to take up a two year apprenticeship for which she will earn $10 000 per year.
After that she expects to earn $25 000 per year. She could take an unskilled job which pays
$16 000 per year instead of the apprenticeship.
What is the opportunity cost in the two years of completing the apprenticeship?
A $10 000 B $12 000 C $25 000 D $32 000
4 Microeconomics analyses choices in various situations.
Which area of economic study does it not include?
A costs and revenues of a firm

B individual consumer behaviour
C policies for economic growth
D wages for different occupations
© UCLES 2020 0455/12/M/J/20

3
5 What is a cause of market failure?
A many firms
B monopoly
C profit maximisation
D specialisation
6 The diagrams show the supply curve for an individual grower of tomatoes and for the total market
supply of tomatoes.
individual grower total market
3.0 3.0
price price
per kg per kg
($) ($)
1.5 1.5
0.5 0.5
0 0
1000 3000 6000 100 000 300 000 600 000
quantity quantity
(kilograms) (tonnes)
What explains the similarity of the two curves?
A As costs rise growers need to get a higher price to increase output.

B At the lower prices each grower supplies more tomatoes.
C The profitability per unit is the same for all growers irrespective of output.
D Supply is not always influenced by price.
7 The price of bread rose by 5% and the quantity demanded fell by 4%.
What was the price elasticity of demand for bread?
A –0.4 B –0.8 C –1.25 D –2.0

4
8 Saudi Arabia specialises in oil extraction and refining. This is a capital-intensive industry with
highly skilled labour.
What might be a disadvantage of this specialisation?
A Oil companies have increased training costs as each worker needs many different skills.
B Oil companies may find it difficult to achieve economies of scale.
C Resource allocation is not efficient because a narrow range of goods is being produced.
D Workers may face a restricted range of job opportunities.
9 What would most likely cause a person to increase their savings?
A a decision to plan for retirement

B a fall in income
C a fall in interest rates
D a reduction in tax-free saving schemes
85
percent 80
75 year 2
70
65
year 1
60
55
27 30 35 40 45 50 55 60 62
age

© UCLES 2020 0455/12/M/J/20

5
food leisure
A decrease decrease
B decrease increase
C increase decrease
D increase increase
12 The table shows total fixed and total variable costs at different levels of output for a firm.
total total
output fixed cost variable cost
$ $
100 1000 1000

200 1000 1500
300 1000 2000
400 1000 2500
What happens as output rises?
A Average fixed cost falls.

B Average fixed cost rises.
C Average variable cost remains constant.
D Average variable cost rises.

A 100 1000 1300

B 200 1800 2200
C 300 2700 3000
D 400 3200 3400

6
14 Which statement proves there has been an increase in productivity for a factory making tractors?
A 10% more workers results in a 10% increase in tractors produced each week.
B Output per worker increases from 3 tractors to 4 tractors per month.
C Production increases as more workers are hired.
D Starting a night shift leads to an increase in production of 10 tractors a day.
15 When do economies of scale take place?
A in the short run

B if variable factors become fixed
C when all factors of production are fixed
D when all factors of production are variable


18 A government increased revenue by increasing taxes on firms.
Which tax did it increase?
A inheritance tax
B profits tax
C sales tax
D value added tax
© UCLES 2020 0455/12/M/J/20

7
19 Why are governments responsible for the defence of the country?
A It is impossible to charge a price for defence.

B It prevents individual citizens having access to weapons.
C Only governments can manufacture weapons.
D Providing defence is very expensive.
20 Information about job vacancies on a government website has led to a decrease in short-term
unemployment.
What is the term for this type of unemployment?
A cyclical unemployment
B frictional unemployment
C structural unemployment
D technological unemployment
21 The table shows figures for the real GDP of a country.
quarter 1 quarter 2 quarter 3 quarter 4

($bn) ($bn) ($bn) ($bn)
100 101 99 98
A quarter is three months.
During which quarters was the country experiencing a recession?
A quarters 1 and 2
B quarters 2 and 3
C quarters 3 and 4
D the entire period


8

% % %
country W 1.4 3.4 10.2

country X 3.7 8.7 12.3
country Y 3.6 7.3 14.2
country Z 2.1 6.0 7.7

24 Due to war, some people are living in absolute poverty.
What is the main indicator of absolute poverty for these people?
A dependence on aid for medical treatment

B lack of transport to escape abroad
C living in tents in temporary camps
D receiving insufficient food for basic nutrition
25 Which country would be classified as the most developed based on the data in the table?
gross domestic
population
country product per year
(millions)
($m)
A 600 3
B 700 2
C 12 000 40
D 15 000 100
© UCLES 2020 0455/12/M/J/20

9
labour
productivity
A falls falls rises

B falls rises falls
C rises falls falls
D rises rises rises
27 Which protectionist measure would be most suitable for a government to use to support the
growth in exports of an industry?
A embargo
B quota
C subsidy
D tariff
28 There has been an appreciation of the value of a country’s currency against other currencies.
What effects will this have on prices of imports of raw materials and prices of exports of
manufactured goods?
prices of imports of prices of exports of

raw materials manufactured goods
A cheaper cheaper
B cheaper more expensive
C more expensive cheaper
D more expensive more expensive
29 What is a disadvantage of increased specialisation by a country?
A It becomes more reliant on imports to meet all its needs.

B It reduces the potential for international trade.
C It results in access to a greater variety of goods for consumers.
D It results in lower costs for home produced goods.

10
2012.

balance of goods
¥ trillion
2011 –1.61 –1.76 14.04 –1.11

2012 –5.23 –2.33 13.55 –1.02
A balance of goods
© UCLES 2020 0455/12/M/J/20

Cambridge IGCSE™
ECONOMICS 0455/13
45 minutes

*7721308328*

Soft clean eraser
INSTRUCTIONS
INFORMATION
IB20 06_0455_13/3RP
2
1 A natural resource was discovered in a country. The exploitation of this resource allowed the
country to double its gross domestic product within ten years.
Why did this not solve the basic economic problem?
A Exploiting the resource required high expenditure on capital equipment.

B Exploiting the resource caused significant environmental damage.
C Gross domestic product was unevenly distributed in the country.
D Wants still exceeded the resources available to meet those wants.
2 The diagram shows a shift in a country’s production possibility curve (PPC).
capital
goods
O
consumer
goods
What would cause the shift from X to Y?
A a fall in the unemployment rate

B a fall in consumer demand
C a rise in the rate of inflation
D a rise in the size of the labour force
3 A farmer decides to grow potatoes instead of wheat.
What is the opportunity cost of growing the potatoes?
A the output of wheat

B the price of seed potatoes
C the profit from growing potatoes
D the time spent preparing the potato field
© UCLES 2020 0455/13/M/J/20

3
4 Which are both macroeconomic decisions?
decision 1 decision 2
A a school recruits more teachers a firm sets the prices for its products
B a central bank reduces money supply a government spends more on defence
C a government increases tax rates a farmer decides which crops to grow
D a household cuts its energy use a worker accepts an offer of overtime
5 What is the function of the price mechanism in a market economy?
A allocating resources and guiding choices

B allowing governments to provide price stability
C enabling markets to operate fairly
D preventing competitors from entering a market
6 The diagrams show changes in the market conditions for coffee.
Which diagram shows the effect of a poor harvest of coffee beans?
A B
price S2 price S1
S1 S2
D
D
O O
quantity quantity
C D
price price S
S
D2 D1
D1 D2
O O
quantity quantity

4
7 The price elasticity of supply of good X is 0.1. The good suddenly becomes very fashionable,
leading to a large increase in demand.
What would be the likely outcome of this change in the short term?
A a large increase in output

B a large increase in price
C a small increase in price
D a small increase in revenue
8 What is a disadvantage to employers of switching to production using division of labour?
A average cost decreases

B flexibility of workers is lost
C repetition of tasks saves time
D training time decreases
9 What is an advantage to a country of having an efficient commercial banking system?
A It controls the money supply.

B It discourages spending.
C It encourages tax evasion.
D It enables investment.
© UCLES 2020 0455/13/M/J/20

5
85
percent 80
75 year 2
70
65
year 1
60
55
27 30 35 40 45 50 55 60 62
age

food leisure
A decrease decrease
B decrease increase
C increase decrease
D increase increase
12 A firm produces 1000 units and has a total cost of $50 000. The variable cost per unit produced is
$40.
What is the total fixed cost of the firm?
A $1000 B $4000 C $10 000 D $40 000

6

A 100 1000 1300

B 200 1800 2200
C 300 2700 3000
D 400 3200 3400
14 Firms can grow by increasing the internal scale of their operations.
What might be a disadvantage of this to the firm?
A average cost begins to fall

B it is difficult to motivate workers
C labour is replaced by robots
D markets become global
15 A government owns and runs an airline.
Which combination of ownership and sector is this?
ownership sector
A private secondary
B private tertiary
C public secondary
D public tertiary

© UCLES 2020 0455/13/M/J/20

7

18 What is the main aim of supply-side policy?
A increasing economic growth by raising productivity

B increasing the balance of payments surplus by restricting free trade
C reducing the government’s budget deficit by increasing taxation
D reducing the money supply by increasing the rate of interest
19 A government is not allowed to increase its military spending.
Government spending is currently at X.
Which diagram illustrates a possible change in government spending?
A B
Y
military military
spending Y spending X
O non-military O non-military
spending spending
C D
Y
military military
spending X spending X
O non-military O non-military
spending spending

8
20 A country has full employment.
Which policy is most likely to lead to a fall in economic growth in the short run but an increase in
economic growth in the long run?
A lowering the retirement age

B raising the school leaving age
C restricting the immigration of key workers
D selling assets owned in other countries
21 A government has a contractionary fiscal policy to reduce inflation. What will the government
increase?
A expenditure on infrastructure
B income tax rates
C personal tax allowances
D unemployment benefits


% % %
country W 1.4 3.4 10.2

country X 3.7 8.7 12.3
country Y 3.6 7.3 14.2
country Z 2.1 6.0 7.7

© UCLES 2020 0455/13/M/J/20

9
24 Real incomes have risen in a country.
Which situation would definitely have caused this?
money
price level
incomes
A fell fell
B fell rose
C rose rose
D rose fell
25 In recent years some low-income countries have achieved higher rates of economic growth than
high-income countries.
What is most likely to explain this accelerated economic growth?
A ease of transfer of modern technology to increase productivity

B falling agricultural prices
C higher ratios of labour to capital in manufacturing industries
D increased trade barriers by high-income countries
labour
productivity
A falls falls rises

B falls rises falls
C rises falls falls
D rises rises rises
27 What are the effects on price and equilibrium quantity of the imposition of an import tariff on a
good?
price equilibrium quantity
A decreases decreases
B decreases increases
C increases decreases
D increases increases

10
28 Which change will not increase a surplus on the current account of the balance of payments of a
country?
A a decrease in the value of imports

B a decrease in primary income outflows
C an increase in the amount of development aid received
D an increase in domestic inflation rates
29 An economy with a floating exchange rate experiences an increased deficit on the current
account of the balance of payments.
What will result from this?
A an increase in government debt

B an increase in its foreign currency reserves
C an increase in the demand for its currency on the foreign exchange market
D an increase in the supply of its currency on the foreign exchange market
2012.

balance of goods
¥ trillion
2011 –1.61 –1.76 14.04 –1.11

2012 –5.23 –2.33 13.55 –1.02
A balance of goods
© UCLES 2020 0455/13/M/J/20

Cambridge Assessment International Education
Cambridge International General Certificate of Secondary Education
ECONOMICS 0455/11
45 minutes
Additional Materials: Multiple Choice Answer Sheet
Soft clean eraser
*1597159870*
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 9 printed pages and 3 blank pages.
IB19 06_0455_11/2RP
2
1 What would an economist regard as an example of the factor of production capital?
A an individual’s purchase of stocks and shares

B borrowing by a firm to pay for electricity
C the building by a firm of a new factory
D total savings by individuals in a country
goods
O services
Why is the curve usually drawn like this?
A International free trade exists.

B Opportunity cost changes.
C Resources are unlimited in supply.
D Some resources will be unemployed.
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 Which situation indicates a mixed economy?
A Economic activity is controlled entirely by the private sector.

B Individual choices are unaffected by government actions.
C Services are provided by both private and public sectors.
D The government carries out all planning and decision making.
© UCLES 2019 0455/11/M/J/19

3
5 What causes market failure?
A government provision of services

B social costs equal private costs
C the existence of external benefits
D the existence of perfect competition
6 A newspaper reported that ‘The world market for coffee has returned to equilibrium’.
Which situation supports this statement?
A A sequence of poor harvests resulted in shortages.

B Decreased transport costs led to a surplus of supply.
C Farmers matched demand by planting more coffee bushes.
D The price of coffee was fixed between producers.
7 The table shows the demand schedule for a good at different prices.
price quantity
$ demanded
8 200
10 160
12 120
14 60
The current market price for the good is $10.
Following a 20% increase in price, what will be the change in the quantity demanded?
A – 60 B – 40 C +120 D +200
8 Carlos has been offered a new job with a large multinational company. He is undecided whether
to accept the position.
What is a non-wage factor he might consider?
A bonus payments
B holiday entitlement
C overtime rate
D salary level

4
9 Unlike the UK and US, a significant proportion of the shares on the stock exchanges of China and
Russia are of state-owned enterprises.
Which judgement about China and Russia can be made from this information?
A their distribution of income and wealth

B their level of development
C their stages of production
D their type of economic system
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
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.
© UCLES 2019 0455/11/M/J/19

5
12 A large bakery buys a flour mill.
Which form of integration is this?
A conglomerate
B horizontal
C vertical backwards
D vertical forwards
13 Why is the energy supply industry dominated by very large firms in many economies?
A Government controls prevent the exploitation of consumers.

B High fixed capital costs exist.
C Labour-intensive production techniques are used.
D Non-price advertising increases competition.
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

6
16 A government increases the rate of income tax in order to pay for extra transfer payments,
including cash benefits to the poor.
What must occur as a result of this?
A It changes the distribution of income.

B It ensures the equality of incomes.
C It leads to more people paying income taxes.
D It reduces the level of unemployment.
17 The standard rate for Value Added Tax (sales tax) is 20% in a country. Different consumers
buying the same product have to pay the same amount of tax.
What kind of tax is this?
A direct
B progressive
C proportional
D regressive
18 The diagram shows the demand curve D1 and supply curve S1 for a good. The government
introduces a subsidy to encourage production.
price S1
$ S2
30
25
20
D1
0 4 5
quantity
What will be the total cost of the subsidy to the government?
A $40 B $50 C $100 D $150
© UCLES 2019 0455/11/M/J/19

7
19 Which statement about interest rate changes is accurate?
A A fall in interest rates will always increase inflation.

B A rise in interest rates may increase cost-push inflation.
C A rise in interest rates will raise the level of investment in a country.
D Interest rate changes have no impact on the level of production.
20 In Uganda, the rate of inflation fell from 5% in 2014 to 2% in 2015.
Which conclusion can be drawn from this information?
A Prices were higher in 2015 than in 2014.

B The cost of living fell between 2014 and 2015.
C The standard of living fell between 2014 and 2015.
D Ugandan citizens were better off in 2015 than 2014.
21 What would not increase the Human Development Index (HDI) of a country?
A an increase in the level of car ownership

B an increase in life expectancy at birth
C a rise in the GDP per head
D a rise in the number of years of schooling
22 A country is experiencing a period of full employment.
What is most likely to lead to an increase in demand-pull inflation?
A an increase in government spending

B an increase in imports
C an increase in income tax rates
D an increase in sales tax

8
23 The table shows the percentage change from 2015–2016 in gross domestic product (GDP) and
consumer prices for selected countries.
Which country was suffering from economic recession and inflation?
country GDP consumer prices
A Australia +1.8 +1.3

B Brazil –2.9 +8.3
C China +6.7 +2.0
D Japan +1.1 –0.2
24 Which policy is most likely to reduce relative poverty?
A make income tax rates less progressive

B reduce benefit payments
C reduce the minimum wage
D reduce the rate of sales tax
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
© UCLES 2019 0455/11/M/J/19

9
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 What is the most accurate definition of a foreign exchange rate?
A a rate at which exports are exchanged for imports

B a rate determined by the demand and supply of the currency
C a value of a currency as fixed by the government
D a value of a currency expressed in terms of another currency
29 In 2013, the European Union (EU) levied a 48% tariff on low-priced Chinese solar panels
because the low price was the result of subsidies from the Chinese government.
Which argument for protectionism was the EU using?
A the anti-dumping argument

B the infant industry argument
C the strategic industry argument
D the sunset industry argument
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 0455/11/M/J/19

ECONOMICS 0455/12
45 minutes
Soft clean eraser
*8190973957*

IB19 06_0455_12/3RP
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
A cost of water
B loss of farmland
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

3
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

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

© UCLES 2019 0455/12/M/J/19

5
2015.
change in
%
doctors 153
lawyers 114
accountants 60
bricklayers 37

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

6
costs
W
O Z
output
A WX B WY C XY D XZ
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

7
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

8
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.
© UCLES 2019 0455/12/M/J/19

9
living?

B Bhutan 36 14 53 107
D Brunei 25 5 72 22


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

10
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
A fall fall
B fall rise
C rise fall
D rise rise
© UCLES 2019 0455/12/M/J/19

ECONOMICS 0455/13
45 minutes
Soft clean eraser
*2997090762*

This document consists of 8 printed pages.
IB19 06_0455_13/3RP
2
1 In farming, what is an example of what economists call capital?
A savings the farmer has in the bank

B shares in a farming company
C the money the farmer set aside to pay taxes
D the tractor owned by the farmer
2 What would cause an outward shift of a country’s production possibility curve (PPC)?
A a fall in unemployment
B an increase in the rate of income tax
C an increase in the labour force
D a reduction in expenditure on education
A cost of water
B loss of farmland
4 What is a characteristic of tertiary industries?
A They are located away from centres of population.

B They do not sell to the final consumer.
C They tend to be labour-intensive.
D They transform raw materials into goods.
5 China has built a new railway in Kenya from the capital, Nairobi, to the seaport of Mombasa.
Kenya must repay the cost of the railway to China. Journey time has been reduced significantly
but fares have increased and farmers have lost agricultural land along the new line.
Who bears the external costs of this operation?
A China who built the new railway

B farmers who have lost agricultural land
C Kenya who must repay the cost to China
D passengers who pay the higher fare
© UCLES 2019 0455/13/M/J/19

3
6 What is meant by equilibrium in a market?
A where products offered for sale equal consumer demand

B where profit is at the expected level
C where the quantity of inputs equals the quantity of output
D where total costs equal total revenue
7 A product has a price elasticity of demand of – 0.5.
What happens to the demand for a product if its price falls from $1 to $0.80?
A It decreases by 10%.
B It decreases by 20%.
C It increases by 10%.
D It increases by 20%.
8 The demand for gas in a country becomes price-inelastic.
What will happen as a result?
A Gas workers will be less likely to be successful in obtaining wage increases.

B Gas workers will be more likely to be successful in obtaining wage increases.
C Total expenditure on gas by consumers will fall when its price rises.
D Total expenditure on gas by consumers will rise when its price falls.
9 Which advantage do coins have that make them more suitable than banknotes to act as money?
A They are more divisible.

B They are more durable.
C They are more portable.
D They are more recognisable.


4
2015.
change in
%
doctors 153
lawyers 114
accountants 60
bricklayers 37

12 Which business organisation is most likely to have unlimited liability?
A co-operative
B multinational
C public limited company
D sole trader
13 What is an example of a technical economy of scale?
A Banks provide loans at a lower interest rate to bigger firms.

B Bigger firms hire more workers.
C Firms obtain discounts when buying in bulk.
D Machines are used closer to their full capacity.
© UCLES 2019 0455/13/M/J/19

5
costs
W
O Z
output
A WX B WY C XY D XZ
A $100 000 B $150 000 C $220 000 D $370 000
16 Which form of taxation always takes an increasing percentage of the taxpayer’s income as it
rises?
A indirect
B progressive
C proportionate
D regressive
17 What is the most likely effect of a government reducing the money supply?
A Employment will decrease.

B Growth will increase.
C Inflation will increase.
D Tax rates will decrease.

6
18 Sometimes the government regulates the market to protect the interests of consumers.
Which kind of regulation would achieve this protection?
A discouraging economies of scale that lead to lower costs

B preventing mergers which result in high monopoly prices
C reducing shop opening hours
D reducing the range of products supplied to the market
19 The diagram shows percentage (%) changes in prices and wages over time.
2.0 prices
% change
in wages 1.5
and prices
1.0
0.5
wages
0
2000 2005 2010 2015
year
What does the diagram indicate?
A Inflation is proportionately related to wage levels.

B The gap between wages and prices is constant.
C Wages are highest in 2010.
D Wage earners have increasingly less purchasing power.
20 Why might GDP per head be underestimated in a developed economy?
A It does not account for changes in population.

B It does not include financial services output.
C It does not include the hidden economy.
D It does not take into account the primary sector.
21 What is included in the Human Development Index (HDI)?
A gender inequality
B life expectancy at birth
C political freedom
D the impact of pollution
© UCLES 2019 0455/13/M/J/19

7
22 What is most likely to have caused a long-term decrease in the numbers employed in the banking
sector of an economy?
A frictional unemployment caused by relocating a bank’s headquarters

B seasonal unemployment caused by reduced customer demand in the summer
C technological unemployment caused by an increase in internet banking
D voluntary unemployment caused by a reduction in wage rates
23 What might cause prices to rise because of cost-push inflation?
A an increase in government spending on education

B an increase in household consumption
C an increase in the balance of payments surplus
D an increase in wages and salaries
24 Which action might be taken by an economy wishing to produce a greater range of products?
A concentrate on the production of primary products

B encourage imports of manufactured goods
C encourage investment by multinational companies
D increase interest rates
living?

B Bhutan 36 14 53 107
D Brunei 25 5 72 22


8

28 Changes in the foreign exchange rate of a country resulted in a depreciation of its currency.
What is not likely to happen?
A The costs of imported raw materials will fall.

B The country’s export trading position will become more competitive.
C The country’s residents will find it more expensive to take holidays abroad.
D The current account deficit will be unchanged.
29 Which item will register as an outflow on the services section of the current account of the US
balance of payments?
A money paid by chemical producers in the US for foreign oil

B money paid by foreign firms for US cars
C money paid by migrant workers in the US to their families overseas
D money paid by US tourists visiting attractions in other countries
A fall fall
B fall rise
C rise fall
D rise rise
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 0455/13/M/J/19

Cambridge International Examinations
ECONOMICS 0455/11
45 minutes
Soft clean eraser
*1317896062*

Write your name, Centre number and candidate number on the Answer Sheet in the spaces provided
IB18 06_0455_11/4RP
2
1 The Norwegian government chose to spend the profits from oil on stocks, bonds and property.
The possibility of improving domestic infrastructure, therefore, was not taken.
Which economic concept does this best illustrate?
A cost of production
B finite resources
C opportunity cost
D production possibility frontier
2 What would be classified by an economist as the factor of production known as land?
A a discovery of oil in the South China sea

B an oil rig bought by an oil company
C money held by the oil companies in their bank accounts
D the productivity of oil workers
3 What is the cause of the economic problem facing all countries?
A climate change and global warming

B significant quantities of unemployed resources
C uneven distribution of income and wealth
D unlimited wants in relation to limited resources
4 Which activity takes place in the tertiary sector?
A assembling computers
B giving legal advice
C harvesting grain
D making bread
© UCLES 2018 0455/11/M/J/18

3
5 In the diagram, suppliers have set the price of a product at PS. Economic theory predicts that the
equilibrium price of the product will rise to PE.
S
price
PE
PS
D
O
quantity
What is the reason for this movement in price?
A Demand for the product will increase.

B No more of the product can be supplied.
C Some consumers are willing to pay higher prices.
D Suppliers are facing rising costs.
6 A government approved the construction of a new railway line connecting major cities. It would be
built by a private company but be funded partly through taxation. It would create many jobs.
People living on the route worried about the harm to their environment.
Which concepts are directly involved in this statement?
A excess demand and public corporation

B government subsidies and perfect competition
C market system and income distribution
D private benefit and external cost

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 is a function of a central bank?
A accepting deposits from the public

B determining tax rates
C implementing monetary policy
D lending to businesses
9 What is likely to lead to an increase in the wages of university lecturers?
A an increase in the fringe benefits provided to university lecturers

B an increase in the tuition fees paid by university students
C government policies reducing the length of the training for university lecturers
D increased demand from students to study at university
10 When is a trade union likely to have more power to increase its members’ wages?
A when imports are increasing

B when labour supply is increasing
C when output is increasing
D when unemployment is increasing
© UCLES 2018 0455/11/M/J/18

5
11 The table shows the percentage (%) of income saved by different age groups.
age (years) 15–29 30–39 40–49 50–64 65+

% of income saved –30 –5 +15 +30 –10
A Over the age range shown total savings equalled total dissavings.
B The 15–29 age group has the lowest level of income.
C The 50–64 age group saves the highest percentage of its income.
D The 65+ age group has a lower income than the 30–39 age group.
12 Which characteristic can exist both in monopoly and in perfect competition?
A freedom of entry
B many buyers
C many sellers
D perfectly elastic demand curve
13 An industry is experiencing diseconomies of scale.
What will be happening to long run average cost and total cost?
long run
total cost
average cost
A decreasing decreasing
B decreasing increasing
C increasing decreasing
D increasing increasing

6
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.
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 What would a government reduce as part of an expansionary monetary policy to increase

employment?
A government spending
B the money supply
C the rate of interest
D unemployment benefit
17 What is an aim of government policy?
A income tax
B interest rates
C stable prices
D unemployment
© UCLES 2018 0455/11/M/J/18

7
18 The table shows the amount of tax to be paid at different weekly incomes.
weekly income ($) 100 150 200 250

weekly tax ($) 20 30 36 40
Which statement describes the system of income tax as income rises over this range?
A It is progressive throughout.
B It is proportional then becomes progressive.
C It is proportional then becomes regressive.
D It is regressive throughout.
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 An economy is experiencing two consecutive quarters of negative economic growth.
What is this economy experiencing?
A budget deficit
B inflation
C recession
D trade deficit
21 What is included in the calculation of a consumer prices index (CPI)?
A the price of a basket of goods and services

B the price of exports and the price of imports
C the value of the currency on international markets
D the wages of consumers

8
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
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
A Inflation has increased.

B Productivity has increased.
C Profit has increased.
D Working population has increased.
24 What is found in a typical developed country?
A fast rate of economic growth

B high population growth
C limited use of technology
D significant tertiary employment
25 Which characteristic will show that a country has significant absolute poverty?
A A majority of the population will have less than average income.

B Basic living needs are not being met.
C Most people do not have mobile phones.
D There is a high number of people living in rural areas.
© UCLES 2018 0455/11/M/J/18

9
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 has decided that it wants to increase free trade with its trading partners.
Which measure would help it achieve this objective?
A a higher quota on imported cars

B a subsidy to domestic car producers
C an embargo on cars produced in other countries
D higher tariffs on imported goods
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 The Mexican currency (the peso) has fallen in value against the US dollar.
What will be the effect of this on the Mexican economy?
A a decrease in tariffs on imports

B a decrease in the price of exports
C a decrease in the price of imports
D a decrease in the volume of exports

10
30 The table shows the rice yield in four countries.
rice yield
country
(kilos per hectare)
Japan 64
China 53
Bangladesh 20
Thailand 20
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 0455/11/M/J/18

ECONOMICS 0455/12
45 minutes
Soft clean eraser
*9282399993*

IB18 06_0455_12/4RP
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
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.
© UCLES 2018 0455/12/M/J/18

3
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

4
S
price
($) 4
0 10 20 30
quantity (units)
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

5
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
total costs ($) 40 100 120 150


6

16 Which is a supply-side policy?
A increasing interest rates

B increasing taxation
C providing training courses
D selling government bonds
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

7

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


8
over three years.

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

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
© UCLES 2018 0455/12/M/J/18

9

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
countries.

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.

10
rice yield
country
(kilos per hectare)
Japan 64
China 53
Bangladesh 20
Thailand 20

© UCLES 2018 0455/12/M/J/18

ECONOMICS 0455/13
45 minutes
Soft clean eraser
*9067064670*

IB18 06_0455_13/4RP
2
1 The introduction of robots has meant that many firms now require fewer workers to produce their
goods and services.
According to this statement, which factor of production is replacing workers?
A capital
B enterprise
C labour
D land
2 Economics textbooks identify the existence of scarcity as the basic economic problem.
What is it that makes scarcity a problem?
A It can cause inflation and unemployment.

B It is impossible to satisfy unlimited wants.
C It is the first priority of governments.
D It only affects the richest countries.
3 The diagram shows a country’s original production possibility curve XX.
X
manufactured
goods
O X Y
agricultural
goods
What could cause the country’s production possibility curve to move from XX to XY?
A a decrease in the price of manufactured goods

B a major war
C an improvement in fertilisers
D an increase in the employment rate
© UCLES 2018 0455/13/M/J/18

3
4 What is a benefit of the free market system?
A Innovation is encouraged to increase profits.

C Negative externalities can be controlled.
B Subsidies can be used to encourage exports.
D The distribution of goods and services is fair.
5 The diagram shows the demand curve D1 and supply curve S1 for healthcare in an economy. The
original equilibrium is X.
What will be the new equilibrium if the economy experiences sustained economic growth and the
government reduces planning controls on the building of new hospitals?
S2
price
S1
S3
A
D B
X
C
D2
D1
D3
O quantity
6 A private firm is one of a few suppliers of electricity in an economy. It is fined by the government
for pollution from its coal-fired power stations which affect the health of those living nearby.
What does this situation involve?
A a government policy of nationalising an electricity supplier

B a market structure for electricity that is perfect competition
C a monopoly electricity supplier that ignores government controls
D external costs that are the result of electricity production

4
S
price
($) 4
0 10 20 30
quantity (units)
A 0.2 B 0.5 C 1 D 2
8 What is not a function of a central bank?
A It is the lender of last resort to financial institutions.

B It is the sole issuer of notes and coins.
C It lends to individual firms and consumers.
D It manages the national debt for the government.
9 Which change will make a manufacturing company replace labour with capital to maintain the
most efficient combination of factors of production?
A The price of machinery has increased.

B The productivity of labour has increased.
C The productivity of machinery has increased.
D The supply of labour has increased.
10 What is the most likely reason a firm might welcome the introduction of a trade union for its
workers?
A Unions advise on the level of company dividends.

B Unions press for higher minimum wage rates.
C Unions simplify the process of wage bargaining.
D Unions wish to operate labour-intensive production methods.
© UCLES 2018 0455/13/M/J/18

5
11 What is least likely to lead to an increase in consumer spending on a new car?
A a decrease in the cost of car repairs

B a decrease in the price of petrol
C a decrease in the rate of interest
D a decrease in train fares
12 What is a characteristic of perfect competition?
A Firms sell an identical product.

B New firms cannot enter the market.
C The market is controlled by one firm.
D There is a high degree of market concentration.
13 A television manufacturer claims to have the most technically advanced production in the
industry.
What is this most likely to mean when compared with its rival producers?
A It has a greater share of the television market.

B It is a more diversified company.
C It is less likely to be disrupted by strike action.
D It needs a more highly skilled workforce.
total costs ($) 40 100 120 150


6

16 In many countries the government provides financial help to firms who wish to produce electricity
using wind turbines.
Which kind of policy measure is this?
A deregulation
B maximum price
C subsidy
D taxation
A income tax
B interest rates
C stable prices
D unemployment
18 A government seeks to redistribute income from the rich to the poor.
Which combination of policy measures is most likely to achieve this aim?
income tax sales tax state benefit
A decrease decrease decrease

B decrease increase increase
C increase decrease increase
D increase increase decrease
© UCLES 2018 0455/13/M/J/18

7

20 What is a likely consequence of economic growth?
A decreased levels of employment

B decreased levels of exports
C decreased levels of output
D decreased levels of poverty
21 A basket of goods is used to calculate a country’s rate of inflation.
What is included in the basket of goods?
A a representative sample of current household spending

B all goods bought in the country
C the spending on an unchanging group of necessities
D the 50 most popular items of household spending


8
over three years.

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

24 Provision of services in rural districts of developing countries tends to occur later than those in
urban areas.
For which service would this not be correct?
A medical research units

B mobile phone networks
C modern transport systems
D university teaching departments
25 The table shows a country’s past and predicted age structure, as a percentage (%), from
2000 to 2150. The working age range is 15 – 64.
2000 2050 2100 2150

age
% % % %
65 and over 7 14 25 28
15 – 64 63 68 60 56
14 and under 30 18 15 16
Which statement describes the behaviour of the dependency ratio over the period?
A It falls and then rises.

B It falls continuously.
C It rises and then falls.
D It rises continuously.
© UCLES 2018 0455/13/M/J/18

9

27 What would have the most severe restriction on the volume of international trade in steel?
A an embargo
B a licence system
C a quota
D a tariff
countries.


10
29 The table refers to a country’s balance of payments on current account.
$bn
goods exports 100

goods imports 125
services exports 60
services imports 50
income and transfers balance +10
A a current account deficit of $5bn

B a current account surplus of $5bn
C a goods and services deficit of $35bn
D a goods and services surplus of $15bn
rice yield
country
(kilos per hectare)
Japan 64
China 53
Bangladesh 20
Thailand 20

© UCLES 2018 0455/13/M/J/18

ECONOMICS 0455/11
45 minutes
Soft clean eraser
*5675359770*

IB17 06_0455_11/3RP
2
1 Which combination of terms gives the general definition of the economic problem?
A bigger families, less food, starvation

B falling supply, rising demand, shortage
C higher population, fewer jobs, unemployment
D limited resources, unlimited wants, scarcity
2 Helium is a gas that is limited in supply. It takes thousands of years to form from decaying
radioactive rocks. The US government holds 35% of the world’s supply and has been selling its
stocks. Helium is essential in medical scanners. It is also used for party balloons which some say
is a wasteful alternative use of a valuable good.
Which concepts can be applied to the above statement?
A demand and supply, government subsidy

B excess demand, resource allocation
C factors of production, private monopoly
D opportunity cost, public sector
3 The diagram shows a production possibility curve for an economy.
Which point on the diagram is the most efficient for the economy to produce both consumer
goods and capital goods?
capital A
goods
C
B
D
O
consumer goods
© UCLES 2017 0455/11/M/J/17

3
4 The diagram shows the market for a product.
S
price
W X
Z Y
D
O quantity
Which statement about the points marked on the diagram is correct?
A The distance from W to X shows a shortage of the product.

B The distance from Z to Y shows a surplus of the product.
C The movement from W to Y shows a fall in the quantity demanded of the product.
D The movement from X to Z shows a fall in the quantity supplied of the product.
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

4
6 A football club raises all stadium seat prices by 5%. The stadium is divided into four zones. The
demand for seats falls by 1% in zone W, by 3% in zone X, by 5% in zone Y and by 6% in zone Z.
In which zone is the responsiveness of demand for seats to the price change elastic?
A zone W
B zone X
C zone Y
D zone Z
7 A project to build one of the world’s biggest coal mines was planned in Australia. The project was
estimated to cost $US12.5 million. It would create employment but threaten endangered species
as large coal ships would damage the Great Barrier Reef.
What effects would this project have on the following costs and benefits?
private cost private benefit external cost
A decrease uncertain uncertain

B increase decrease increase
C increase increase increase
D uncertain increase increase
8 What is likely to happen when the rate of interest increases?
A consumer spending increases

B firms buy fewer machines
C people hold more cash
D savers earn lower rewards
9 In which type of work are employees most likely to earn their highest income at a relatively young
age?
A manual building work
B professional legal work

C skilled craft work
D university teaching work
© UCLES 2017 0455/11/M/J/17

5
10 Individuals produced their own goods. They then decided to specialise. They formed a group and
offered their skills to each other but without the use of money.
What is not likely to be the result for the group?
A It will enjoy a rise in its material standard of living.

B It will have a wider choice of goods and services.
C It will need to use a system of barter.
D It will save time in obtaining goods and services.
11 Tea is a very popular drink in Turkey and Morocco but coffee is an alternative drink preferred by
many people. Many cafés provide a small biscuit with either a cup of tea or coffee. Some people
put sugar in the drinks to sweeten them.
How would the relation between these goods be classified?
tea and coffee tea and biscuits coffee and sugar
A complement complement complement

B complement substitute substitute
C substitute complement complement
D substitute complement substitute
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 cost would be considered variable by a bus company?
A a new bus
B diesel fuel
C loan repayment
D rent

6
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 how a firm’s production changes as it employs more workers.
number of workers 10 20 30 40
total production (kilos) 50 100 300 600
What happens to productivity as more workers are employed?
A It is constant then falls.

B It is constant then rises.
C It rises then becomes constant.
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 intends to improve skills by offering free training to school leavers at age 16 until
they reach 18 years. It proposes to pay for this by taxing the profits of firms.
Which policies do these proposals involve?
provision of payment for

skills training skills training
A fiscal fiscal
B monetary monetary
C supply-side fiscal
D supply-side monetary
© UCLES 2017 0455/11/M/J/17

7
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 The charts relate to the Financial Statement of the government of New Zealand for 2014.
sales of goods
state
and services other enterprises
tax from 18% $21.0b $20.7b
incomes
31%
$89.4 other $92.2
billion (b) revenue billion (b)
total 14% total
revenue expenses education
health $12.3b
$14.9b
corporate
tax goods and
10% other services tax welfare
taxes 18% $23.3b
9%
What can be concluded?
A Expenditure on welfare was higher than the combined expenditure on education and health.
B The government was $2.8 billion in surplus.
C The largest source of the government’s income was from direct taxation.
D The number of business corporations was very small.
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

8
21 A country has a low GDP and a large population but ranks relatively highly on the HDI.
Which combination may exist in the country?
provision of education and

income per head
healthcare (merit goods)
A high high
B high low
C low low
D low high
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 In a developing country real incomes have risen.
Which situation would definitely have caused this?
money
price level
incomes
A fell fell
B fell rose
C rose unchanged
D rose fell
24 Which characteristic do developed and developing economies have in common?
A participation in international trade

B high birth rates and high death rates
C rapid economic growth
D stable financial conditions and institutions
© UCLES 2017 0455/11/M/J/17

9
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 gives information about four countries.
Which country is likely to have the highest standard of living?
% of labour force
GDP per head
life expectancy in service
($)
industries
A 51 250 48
B 51 400 52
C 61 450 52
D 61 400 40
27 Which government policy is most likely to increase the volume of exports?
A devaluation
B embargoes
C quotas
D tariffs

10
28 What is necessarily involved in international free trade?
A the absence of transport costs

B the gift of foreign aid from charities
C the supply of zero interest rate government loans
D the unrestricted exchange of goods and services
29 In recent years, the US has experienced a deficit on its overall current account of the balance of
payments.
What could have led to an increase in the size of the deficit?
A increased competitiveness of goods made in the US

B increased earnings by US investors in foreign companies
C increased numbers of overseas visitors to the US
D increased spending on US military bases abroad
30 In 2015, China was the world’s largest exporter of manufactured goods and a major importer of
oil and minerals. China devalued the yuan (renminbi) by 2%.
According to economic theory, what would have been a consequence of this devaluation?
A China paid less in foreign currencies for imports.

B China reduced its demand for oil and minerals.
C China’s exports became less competitive.
D China’s trading partners improved their balance of trade with China.
© UCLES 2017 0455/11/M/J/17

ECONOMICS 0455/12
45 minutes
Soft clean eraser
*3853652755*

IB17 06_0455_12/3RP
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
© UCLES 2017 0455/12/M/J/17

3
price
X
D
O
quantity demanded
per week
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

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.
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.
© UCLES 2017 0455/12/M/J/17

5
A motor cars.
B rubber.
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

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

6

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
living.
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
© UCLES 2017 0455/12/M/J/17

7
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


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

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

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
© UCLES 2017 0455/12/M/J/17

9
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.
© UCLES 2017 0455/12/M/J/17

ECONOMICS 0455/13
45 minutes
Soft clean eraser
*1637570737*

IB17 06_0455_13/3RP
2
1 Which statement about factors of production is correct?
A The fruit picked from the tree is called land.

B The managers of a company are called enterprise.
C The money used to finance a project is called capital.
D The owner of a company is called labour.
2 A person can make 10 items to sell on a craft stall in a day.
What is the opportunity cost if the person decides to paint a picture instead?
A 10 craft items
B the cost of the materials for the craft items
C the cost of the paint for the picture
D the value of the picture
3 The diagram shows a production possibility curve for agriculture and machinery.
agriculture L
K
N
M
O
machinery
As a country develops, its primary production decreases and its secondary production increases.
Which movement would represent this change?
A K to L B L to N C M to N D N to L
© UCLES 2017 0455/13/M/J/17

3
4 The table shows four people’s demand for t-shirts at two prices.
price of t-shirt demand for t-shirts (units)

$ Elsa George Hamid Shara
10 4 6 3 5
15 2 3 1 4
Who has the most elastic demand for t-shirts when the price rises from $10 to $15?
A Elsa
B George
C Hamid
D Shara
price
X
D
O
quantity demanded
per week

4
6 A company produces an electric car that can be driven much further than other electric cars
without needing recharging. The car does not emit the dangerous fumes that petrol cars do. The
batteries that power the car are very expensive and the company is building a huge factory to
produce batteries more cheaply.
A average cost and mergers

B external costs and mixed economy
C private costs and economies of scale
D public sector and market failure
7 People often eat biscuits when they drink a cup of tea. Between 2010 and 2015, the consumption
of sweet biscuits decreased because of health warnings about high sugar consumption. Sales of
tea, as a result, also fell.
How would this be shown on demand and supply diagrams for biscuits and tea?
biscuits tea
A demand curve moves to left demand curve moves to left

B demand curve moves to right demand curve moves to right
C movement down along the demand curve demand curve moves to right
D movement up along the demand curve demand curve moves to left
8 A student needs to borrow $60 000 to pay for a five-year university course in medicine.
What would motivate the student to borrow to pay for the course?
A Debts must be repaid within the first five years of work.

B Further training in hospitals must follow graduation.
C High earnings are expected in the long-run.
D Many skills gained on the course are non-transferable.
© UCLES 2017 0455/13/M/J/17

5
9 The Congress of South African Trade Unions (COSATU) is the biggest union federation in South
Africa. It represents public sector workers.
In 2010, it had an increase in membership. In the same year, COSATU’s bargaining strength
declined.
What could explain this?
A There was an increase in government spending on welfare payments.
B There was an increase in the country’s unemployment rate.

C There was an increase in the geographical mobility of labour.
D There was an increase in union funds.
10 Which worker is most likely to risk facing a falling income towards the end of their career?
A a manager in an engineering firm

B a manual worker in a building firm
C a supervisor in a retail firm
D an office worker in an advertising firm
11 What is the most likely reason why airline pilots earn more than agricultural workers?
A Agricultural work is difficult.

B Pilots work regular hours.
C There is a surplus of agricultural workers.
D There is no shortage of pilots.
A motor cars.
B rubber.
D tyres.

6
13 A car manufacturer has a highly mechanised assembly line using robots and a few skilled
workers. An international exam board employs many thousands of examiners to mark candidates’
examination papers.
Which row describes each of these activities?
car manufacturer international exam board
A capital-intensive capital-intensive
B capital-intensive labour-intensive
C labour-intensive capital-intensive
D labour-intensive labour-intensive

15 The table shows the total costs of a firm. It can sell the units for $10 each.
quantity produced (units) 7 8 9 10

total cost ($) 10 15 20 25
How many units will the firm produce to maximise profits?
A 7 B 8 C 9 D 10

© UCLES 2017 0455/13/M/J/17

7
17 Why can government spending be described both as a fiscal policy and a supply-side policy?
A It has a nationwide effect and can control firms’ production possibility curves.
B It is announced in the budget and can increase the economy’s ability to produce.
C It is determined by the central bank and can raise the cost of production of firms.
D It must equal tax revenue and can regulate the amount of the money supply.
living.
19 A government cuts the rate of income tax.
What effect is this likely to have on tax evasion and revenue from indirect taxes?
revenue from
tax evasion
indirect taxes
A decrease increase
B decrease no effect
C increase increase
D increase no effect
C unemployment
D wage levels

8
21 In the poorest developing countries it is difficult to measure the size of GDP.
What is the main cause of this?
A A high proportion of the paid workforce is in the informal sector.

B Employment in rural areas is seasonal in nature.
C The provision of services cannot be given a value.
D Women are discriminated against in many jobs.


23 The table shows some information from a developing country.
consumer prices: % change on previous year
percentage change
year
on previous year (%)
2011 4
2012 5
2013 3
2014 2
Which statement must be correct?
A Prices fell between 2013 and 2014.

B The cost of living was lowest in 2014.
C The purchasing power of money rose between 2012 and 2013.
D Those on fixed incomes became worse off between 2011 and 2012.
© UCLES 2017 0455/13/M/J/17

9
24 What is likely to show that a country has a rising level of economic development?
A a reduced inflation rate

B a reduced national income per head
C a reduced provision of healthcare (merit good)
D a reduced unemployment rate
12
billion
10 Africa
8
other Asia
6
India
4
China
2 Latin America
developed countries
0
1950 2000 2050 2075

26 A government in a developing country has given extra funds to promote trade in rural areas by
encouraging the establishment of small shops.
What is likely to increase as a result?
A primary industry in the private sector

B primary industry in the public sector
C secondary industry in the public sector
D tertiary industry in the private sector

10
A devaluation
B embargoes
C quotas
D tariffs
28 Which method would both reduce imports and encourage exports?
A embargoes on dangerous products

B quotas on agricultural produce
C subsidies on locally-produced electronics
D tariffs on iron and steel products
29 The currency exchange rate of the South African rand for the Botswana pula fell by 5.7%
between August 2014 and August 2015.
What would be the immediate effect of this?
A Botswana’s level of protection would fall.

B Botswana’s tourists travelling to South Africa would find it less expensive.
C South Africa’s imports would be cheaper.
D South Africa’s tourists travelling to Botswana would receive more pula per rand.
30 In 2015, China was the world’s biggest importer of oil. In August 2015, China devalued its
currency.
What is likely to have happened?
A The price of China’s exports fell and world oil prices rose as China’s demand decreased.
B The price of China’s exports rose and world oil prices fell as China’s demand increased.
C The price of China’s imports fell and world oil prices rose as China’s demand increased.
D The price of China’s imports rose and world oil prices fell as China’s demand decreased.
© UCLES 2017 0455/13/M/J/17

ECONOMICS 0455/11
45 minutes
Soft clean eraser
*8482992536*

This document consists of 11 printed pages and 1 blank page.
IB16 06_0455_11/3RP
2
1 The diagram shows an initial production possibility curve of PPC1.
PPC2
capital PPC1
goods
O consumer goods
What may cause the movement of the production possibility curve from PPC1 to PPC2?
A a better educated workforce

B a decrease in availability of raw materials
C increased wages
D lower productivity
2 An increase in the number of manufacturing robots in the car manufacturing industry represents
an increase in the quantity of which factor of production?
A capital
B enterprise
C labour
D land
© UCLES 2016 0455/11/M/J/16

3
3 The diagram shows the choices for an individual between leisure and earnings.
18
15
12
hours of leisure X
9
per day
Y
6
0
10 20 30 40 50 60
earnings $
What is the opportunity cost to the individual of the extra earnings when moving from position X
to position Y?
A $10
B $40
C 3 hours of leisure per day
D 9 hours of leisure per day
4 A government taxes the production of cars.
What is likely to decrease?
A the cost of supplying cars

B the price of cars
C the revenue for the government
D the supply of cars at every price
5 Which pair of economic institutions can be found in a market economy?
A charities and public corporations

B multinationals and commercial banks
C public corporations and private companies
D stock exchange and government hospitals

4
6 Developers want to increase the size of a major retail shopping area in a city. It is thought that the
proposal would create hundreds of jobs, be profitable for the shops but cause major traffic
congestion.
What economic concepts are directly involved in this statement?
A external cost and private benefit

B income distribution and inelastic demand
C private investment and a decrease in supply
D social benefit and perfect competition
7 The diagram shows the market for rice.
S2
S1
P2
price P1
D
O Q2 Q1
quantity
What would have caused the equilibrium price to rise from OP1 to OP2?
A a government subsidy to rice farmers

B a successful advertising campaign for rice
C improved rice farming methods
D poor weather conditions
8 What might a trade union usually be expected to do for its members?
A arrange childcare facilities for members’ children

B ensure adequate promotion prospects exist
C negotiate better working conditions
D provide medical insurance
© UCLES 2016 0455/11/M/J/16

5
9 What is the usual reason why citizens trust their country’s banknotes?
A They are acceptable for trade and exchange.

B They are backed by gold at the central bank.
C They are convertible into the US$ or Chinese Yuan.
D They are recognisable and in infinite supply.
10 In the diagram, D1D1 and S1S1 represent the demand for and the supply of labour. W indicates a
legal minimum wage.
An influx of immigrant labour causes the supply curve for labour to shift from S1S1 to S2S2.
D1 S1
S2
W
wage
($)
S1 D1
S2
0 1 2 3 4 5 6 7 8 9 10
labour (millions)
How many people will be employed if the minimum wage legislation is then abolished?
A 4 million B 5 million C 6 million D 7 million

6
11 The table shows how three people spend their income.
person X person Y person Z
food, clothing and housing 30% 25% 50%

entertainment and leisure 35% 35% 25%
luxury goods 35% 40% 25%
For these three people, what is the most likely order of income, from highest income to lowest
income?
A X→Y→Z
B Y→X→Z
C Y→Z→X
D Z→X→Y
12 How does a firm guarantee that it makes the maximum profit?
A by maximising the difference between its total revenue and total cost
B by maximising the number of goods that it sells
C by minimising the number of goods that it keeps in stock
D by minimising the difference between average revenue and average cost
13 Which characteristic does a firm in perfect competition have in common with a monopoly?
A the ability to exclude rivals

B the benefit of internal economies of scale
C the problem of diseconomies of scale
D the wish to maximise profits
© UCLES 2016 0455/11/M/J/16

7
14 The table shows the units of factors of production that a firm needs to employ for two different
levels of output.
land labour capital output
5 2 4 100
10 4 8 150
What is the firm experiencing?
A constant returns to scale

B diseconomies of scale
C external diseconomies of scale
D external economies of scale
15 The diagram shows the demand and supply of places in independent (private) schools which
charge fees. The equilibrium position is X.
The costs of independent (private) schools rise. Also a report is issued which states that
Government schools achieve very good examination results.
What is likely to be the new equilibrium position?
C
B
price A X
O quantity
16 A government wishes to stimulate economic recovery.
Which action will assist this?
A decreasing government investment

B decreasing income tax
C increasing indirect taxation
D increasing interest rates

8
17 What is an expansionary monetary policy?
A a decrease in the interest rate

B a decrease in the rate of value added tax
C an increase in the power of trade unions
D an increase in the standard rate of income tax
18 A government decides to make two changes to its taxation policies. It lowers the tax on petrol and
raises the tax on food.
How do these changes affect the regressive nature of the taxes?
lower petrol higher food

tax tax
A less regressive less regressive

B less regressive more regressive
C more regressive less regressive
D more regressive more regressive
19 The table shows a government’s receipts from taxation.
$m
air passenger duty 10

company profits tax 100
import duty 75
income tax 200
insurance policy tax 10
sales tax (VAT) 400
What is the total amount of revenue raised by indirect taxes?
A $95 m B $300 m C $400 m D $495 m
20 What is Gross Domestic Product (GDP) divided by to calculate GDP per head?
A net migration
B the birth rate
C the total population
D the working population
© UCLES 2016 0455/11/M/J/16

9
21 Who is made worse off during a period of deflation?
A cash holders
B creditors
C debtors
D fixed income earners
inflation interest rates unemployment

% % %
country W 1.4 3.4 10.2

country X 3.7 8.7 12.3
country Y 3.6 7.3 14.2
country Z 2.1 6.0 7.7

23 What must result when a country experiences economic growth?
A a higher Gross Domestic Product

B a lower rate of inflation
C a surplus on the balance of trade
D an improved standard of living for everybody
24 Why may the figure calculated for a developing country’s Gross Domestic Product be inaccurate?
A There are unused resources.

B There is a high reliance on imports.
C There is a large amount of subsistence farming.
D There is a small amount of skilled labour.

10
25 The table gives information on four countries.
Which country is likely to be most developed?
Gross Domestic life

population Product expectancy
(m) ($ billion) (years)
A 100 800 51
B 200 6000 62
C 300 600 48
D 1000 1600 63
26 It has been predicted that by 2050 China will have 53 million fewer children under 14, 100 million
fewer workers and 234 million more people aged over 60.
What will be the likely effect in China of these changes?
A The dependency ratio will fall.

B The Government’s expenditure will fall.
C The Government’s income will fall.
D The total population will fall.
27 What might cause the balance on the current account of Mauritius to improve?
A increased purchases of coffee from Kenya

B increased transport of Mauritian goods in Greek ships
C increased spending by Mauritians on holidays in South Africa
D increased spending by tourists in Mauritian hotels
28 A country says that it wishes to increase its trade protection policies.
What might that involve?
A conservation of resources and taxes on external costs

B eliminating waste in the use of resources and grants to multinational companies
C increased self sufficiency and increased tariffs
D price controls and increased regulations on domestic monopoly industries
© UCLES 2016 0455/11/M/J/16

11
29 It has been suggested that all countries producing arms should ban the export of weapons and
cut production in order to reduce the risk of war.
What would happen if this occurred?
A The balance of payments on current account of countries exporting weapons would

immediately improve.
B The price of existing weapons would fall.
C There would be a risk of structural unemployment in countries that are major producers of
weapons.
D There would be no overall effect on the balance of payments as countries would produce
their own weapons.
30 70% of the 10 million kilograms of tea produced in India is exported. The UK, Japan, and
Germany buy the most.
Wholesale prices rose 10% in 2013 as supply was restricted because of a strike.
How would these circumstances be shown in international trade accounts?
A a credit on the goods and services account for Germany

B a debit on the goods and services account for Japan
C a 10% fall in the balance of the goods and services account for India
D a 10% rise in the balance of goods and services account for the UK
© UCLES 2016 0455/11/M/J/16

ECONOMICS 0455/12
45 minutes
Soft clean eraser
*7873089161*

IB16 06_0455_12/RP
2
1 What economic concept must be at work when there is movement by a country along its
production possibility curve?
A economies of scale
B equilibrium price
C maximum profit
D opportunity cost
24
20
16
hours of leisure 12 X
per day
Y
8
0
20 40 60 80 100 120
earnings $
The person decides to take a job that gives more leisure time.
What is the opportunity cost to the individual of moving from position Y to position X?
A $20
B $80
3 What is the best example of the existence of the economic problem?
A A government provides accommodation for all those who are homeless.

B A police force has a lengthening list of unsolved crimes.
C Janitha hands her homework in at the last permitted deadline.
D Musa completes his journey without putting petrol in his car.
© UCLES 2016 0455/12/M/J/16

3

B the price of cars
5 Which pair of economic institutions is most likely found in a market economy?
A free accident and emergency hospitals and charities

B partnerships and public corporations
C stock exchange and monopolies
D trade unions and local government schools
congestion.


4
7 The diagram shows the price of a product during year 1 and year 2.
price
($)
O year 1 year 2
Which changes in demand and supply are consistent with the price behaviour in year 2?
demand supply
A falls by 5% falls by 10%

B falls by 10% falls by 5%
C unchanged falls by 10%
D rises by 15% falls by 5%
8 A trade union agrees on a ‘closed shop’ policy with employers in an industry.
How does this operate?
A All workers will be members of the trade union.

B Employment will be open only to skilled workers.
C The employers cannot make workers redundant.
D Workers cannot move between employers.
9 When will a central bank act as lender of last resort to a commercial bank?
A when a commercial bank faces a liquidity crisis

B when a commercial bank fails to make a profit
C when a commercial bank needs to raise share capital
D when a commercial bank reduces its lending rates
© UCLES 2016 0455/12/M/J/16

5
legal minimum wage.
D1 S1
S2
W
wage
($)
S1 D1
S2
0 1 2 3 4 5 6 7 8 9 10
labour (millions)

For these three people, what is the most likely order of income, from lowest income to highest
income?
A X→Y→Z
B Y→X→Z
C Y→Z→X
D Z→X→Y

6
13 Two firms agree to integrate their activities.
What must result?
A a change in their ownership structure

B a lowering of average costs of production
C a move from national to international markets
D a reduction in the level of market risk
levels of output.
6 8 4 100
9 12 6 200

B economies of scale
© UCLES 2016 0455/12/M/J/16

7
15 By 2014, government subsidies for the Chinese steel industry led to 200 million tonnes of excess
output.
The diagrams show the market for Chinese steel.
Which would represent the position after the subsidy but before the market adjusted?
A B
price price
($) ($)
0 100 300 0 100 200 400

output (million tonnes) output (million tonnes)
C D
price price
($) ($)
0 100 200 300 0 100 200 400

output (million tonnes) output (million tonnes)


8
17 A government fixes the rate of income tax at $0.20 per dollar earned.
What describes this type of taxation?
A indirect
B progressive
C proportional
D regressive
18 A government introduces a law to reduce the restrictive practices of trade unions.
What would be the most likely purpose of this law?
A to change from a mixed to a planned economy

B to ensure a fairer distribution of earnings
C to increase competition in labour markets
D to reduce government expenditure on job training
$m

import duty 75
income tax 200
inheritance tax 50
sales tax (VAT) 300
What is the total amount of revenue raised by indirect taxes?
A $300 m B $350 m C $385 m D $435 m
20 What would best indicate the start of an economic boom?
A negative growth of Gross Domestic Product

B rising interest rates
C rising levels of employment
D steadily falling price levels
© UCLES 2016 0455/12/M/J/16

9
21 A country has a very high Gross Domestic Product and a small population but has a low standard
of living.
What may be the cause of this low standard of living?
A There is a high inequality of income distribution and a high provision of merit goods.
B There is a high inequality of income distribution and a limited provision of merit goods.
C There is equality of income distribution and a high provision of merit goods.
D There is equality of income distribution and a low provision of merit goods.

% % %
country W 1.4 3.4 10.2

country X 3.7 8.7 12.3
country Y 3.6 7.3 14.2
country Z 2.1 6.0 7.7

23 The weight for a product in the consumer price index was increased.
What is most likely to have caused this adjustment?
A The product has become more expensive to produce.

B The product has been offered for sale in more retail outlets.
C The product has improved in quality and performance.
D The product has taken a bigger share of consumers’ income.

10
24 China is classified as a developing country. Recently, contributions to its Gross Domestic Product
(GDP) were agriculture 10%, construction 13%, manufacturing 32% and services 45%.
Which contribution to GDP usually decreases first when countries move to a higher level of
development?
A agriculture
B construction
C manufacturing
D services
25 Some people think that the debts and interest payments of the poorest countries in the world
should be cancelled.
What might be a disadvantage for the poorest countries if this were done?
A International banks might be less willing to give loans to poor countries.

B Interest payments to the lenders would fall.
C The standard of living of people in the poorest countries would fall.
D Trade between the poorest countries and the rest of the world would increase.
26 Which country is likely to have the highest standard of living?
infant mortality
birth rate death rate life expectancy
rate
A 41 20 31 49
B 32 14 29 59
C 25 6 25 79
D 25 5 22 79

© UCLES 2016 0455/12/M/J/16

11


weapons.
their own weapons.
30 The US currently trades in oil with the UK. The discovery of new oil and gas deposits in the US
will mean that its oil imports decrease and its oil exports increase.
From the initial equilibrium point of X, which letter indicates the new equilibrium point for the US
exchange rate?
S1
B
A S
price
of $ X S2
C
D
D1 D D2
O
quantity of $
© UCLES 2016 0455/12/M/J/16

ECONOMICS 0455/13
45 minutes
Soft clean eraser
*1235507768*

IB16 06_0455_13/2RP
2
1 Which statement about a production possibility curve is correct?
A A production possibility curve is an alternative name for an industry supply curve.

B A production possibility curve is an economic model of potential output.
C A realistic production possibility curve must be drawn as a straight line.
D A production possibility curve applies only to an economy’s production of goods.
2 Which firm is likely to find it most difficult to expand the use of its main factor of production?
A a farm growing crops in extensive fields

B a technology firm dependent on risky innovations
C a textile firm making use of labour-intensive systems
D an engineering firm relying upon capital-intensive methods
18
15
12
hours of leisure X
9
per day
Y
6
0
10 20 30 40 50 60
earnings $
What is the opportunity cost to the individual of the extra earnings when moving from position X
to position Y?
A $10
B $40
© UCLES 2016 0455/13/M/J/16

3

B the price of cars
A local government and charities

B monopolies and commercial banks
C nationalised industries and partnerships
D stock exchange and public corporations
congestion.

7 The diagram shows demand and supply curves for a product. Initially the market is in equilibrium
at point X.
What would be the new equilibrium point if the costs of production fell and a rumour circulated
that the product could become unsafe in extreme weather conditions?
A X C
price
O quantity

4
8 What does the term ‘closed shop’ mean?
A a bankrupt retail establishment

B a trade union that is approved by the government
C an agreement that all workers must be members of the same trade union
D an agreement by trade unions to share members
9 What function does a central bank fulfil?
A It issues currency.
B It offers overdraft facilities to individuals.
C It operates deposit accounts.
D It raises taxation.
legal minimum wage.
D1 S1
S2
W
wage
($)
S1 D1
S2
0 1 2 3 4 5 6 7 8 9 10
labour (millions)
© UCLES 2016 0455/13/M/J/16

5

For these three people, what is the most likely order of income, from lowest income to highest
income?
A Y→X→Z
B Y→Z→X
C Z→X→Y
D Z→Y→X
13 What is true when comparing a monopoly to a perfectly competitive firm?
A Monopolies will have perfect knowledge of their market.

B Monopoly costs are always lower owing to economies of scale.
C Monopoly price is likely to be higher.
D The products that monopolies produce have more limited demand.

6
14 A manufacturing firm increases the scale of its production. Its average total cost curve in the long
run (LRAC) is shown below.
At which point on the LRAC curve is the firm experiencing diseconomies of scale?
A LRAC
cost D
B C
O output
levels of output.
4 3 5 20
8 6 10 40

B economies of scale

© UCLES 2016 0455/13/M/J/16

7
17 When a government aims to encourage economic growth it may adopt supply-side policies.
Which policy is a supply-side policy?
A increasing the money supply

B lowering interest rates
C reducing direct taxation
D retraining unemployed workers
$m

import duty 75
income tax 200
inheritance tax 50
sales tax (VAT) 300
What is the total amount of revenue raised by direct taxes?
A $135 m B $200 m C $300 m D $350 m
19 Which policy combination will be the most effective if a government wishes to increase the level
of employment?
A decrease general taxation and increase the rate of interest

B decrease general taxation and decrease the rate of interest
C increase general taxation and decrease the rate of interest
D increase general taxation and increase the rate of interest.
20 What is most likely to lead to a rise in the rate of inflation?
A a decrease in consumer spending

B a decrease in unemployment benefits
C an increase in import prices
D an increase in income tax

8
21 Which measures, in addition to Gross Domestic Product per capita, are included in the Human
Development Index?
A average earnings and inequalities of incomes

B balance of trade and balance of payments
C life expectancy at birth and expected years of schooling
D size of population and age structure of population

% % %
country W 1.4 3.4 10.2

country X 3.7 8.7 12.3
country Y 3.6 7.3 14.2
country Z 2.1 6.0 7.7

23 Which type of government policy would be most suitable to control external costs of production?
A employment policy
B fiscal policy
C monetary policy
D trade policy
© UCLES 2016 0455/13/M/J/16

9
24 The diagrams show birth rate (BR) and death rate (DR) in three countries, X, Y and Z, in two
years, 1 and 2.
There was no migration.
X Y Z
BR
BR, BR, BR,
DR DR DR DR
BR
DR
DR BR
1 2 1 2 1 2
year year year
Where was there a rise in population in year 1 and a fall in population in year 2?
A X and Z B X only C Y and Z D Y only
25 Why might the emigration of workers help the economy of a developing country?
A The dependency ratio is likely to improve.
B The inflow of transfers of money is likely to increase.

C The least healthy workers are likely to be the last ones to leave.
D The more skilled workers are likely to be the ones to leave.
26 What combination of changes in the birth rate and death rate is most likely to increase the
dependency ratio in a country?
A falls falls
B falls rises
C rises falls
D rises rises


10


weapons.
their own weapons.
30 The value of the Pakistani rupee changes, from 60 rupees to US$1, to 50 rupees to US$1.
What effect will this have on the price of Pakistani products sold in the US and the price of US
products sold in Pakistan?
price of Pakistani products price of US products

sold in the US sold in Pakistan
A increase increase
B increase decrease
C decrease increase
D decrease decrease
© UCLES 2016 0455/13/M/J/16

Cambridge IGCSE™
ECONOMICS 0455/11
Paper 1 Multiple Choice October/November 2020
45 minutes

*3621191727*

Soft clean eraser
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
 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
 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. A mark will not be deducted for a wrong answer.
 Any rough working should be done on this question paper.
IB20 11_0455_11/3RP
2
1 What is the basic economic problem?
A excess supply of goods and services

B lack of profits
C recession
D scarcity of resources
2 On which factor of production does innovation directly depend?
A decisions of entrepreneurs
B high inputs of capital
C long hours of manual labour
D plentiful supplies of land
3 The diagram shows an economy’s production possibility curve (PPC). The economy moves from
point X to point Y.
capital
goods X
O consumer
goods
What is the most likely effect of this change?
A Different quantities of the goods are produced.

B More people are employed.
C There is an immediate fall in gross domestic product.
D There is an increase in investment.
4 Which person makes macroeconomic decisions?
A a bank manager
B a government finance minister
C a shareholder in a firm
D a worker
© UCLES 2020 0455/11/O/N/20

3
5 What is a function of the price mechanism?
A to allocate goods and services

B to calculate national expenditure
C to ensure an equal distribution of income
D to guide government policy decisions
6 The diagram shows a shift in the supply curve for cars in China from S1 to S2.
price
S2
S1
O quantity
What is the most likely cause of this shift in the supply curve?
A an increase in an indirect tax on petrol in China

B an increase in the price of cars in China
C an increase in the wages of Chinese car workers
D a new subsidy given to Chinese car manufacturers
7 The price elasticity of supply of a good is 2. The price of the good then falls by 10%.
What is the effect on quantity supplied?
A It falls by 0.2%.
B It falls by 20%.
C It increases by 0.2%.
D It increases by 20%.
© UCLES 2020 0455/11/O/N/20 [Turn over

4
8 A German car manufacturer builds a factory in India. A group of Indian workers at the factory join
a trade union.
What would this trade union be expected to do for the workers?
A Encourage the workers to bargain individually with the employer.

B Negotiate with the German government on tariff reductions for Indian-produced cars.
C Promote an advertising campaign to sell more Indian cars.
D Protect the workers against unfair dismissal by the employer.
9 Why do women, on average, earn less than men?
A Women may be less able than men.

B Women are not eligible for government jobs.
C Women may not work as hard as men.
D Women often face discrimination in the workplace.
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
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
© UCLES 2020 0455/11/O/N/20

5
12 In the short run, a firm calculates its total fixed cost, total variable cost and total cost. It then plots
a graph showing how they change as output increases.
What happens to the lines showing the total variable cost and total cost as output increases?
A They merge to become one curve.

B They move closer together.
C They move further apart.
D They remain a constant distance apart.
13 A firm has fixed costs of $1000. The table shows the variable cost at different levels of output.
variable cost ($) 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
14 When is it most likely that the demand for labour in an industry increases?
A When the demand for the industry’s product increases.

B When the level of immigration into the country increases.
C When the level of qualifications needed to work in the industry decreases.
D When the level of wages paid in the industry increases.
15 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
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

6
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
18 Which measure would indicate that an expansionary fiscal policy is being used by the
government?
A cuts in government spending

B higher interest rates
C lower interest rates
D lower taxes
19 The diagram shows how a government policy influences the market for biofuel crops in the
private sector.
price supply of biofuel crops

supply after policy applied
demand for biofuel crops
O quantity
According to the diagram, which policy does the government use and what effect does it have on
the market?
policy effect
A subsidy increases supply

B subsidy lowers quantity demanded
C tax decreases demand
D tax increases supply costs
© UCLES 2020 0455/11/O/N/20

7
20 Some governments in the European Union are trying to reduce unemployment.
What should increase to achieve this?
A imports of goods
B interest rates
C public sector spending
D taxation of firms
21 In 2016, Romania had an increase in its real gross domestic product of 4.8%.
What must this mean about the Romanian economy?
A Living standards increased by 4.8%.

B Total consumer income increased by 4.8%.
C Total output of all goods and services adjusted for inflation increased by 4.8%.
D Total output of manufactured goods adjusted for inflation increased by 4.8%.
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
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

8
24 A low-income country experiences extreme poverty in its rural areas.
What is a possible cause of this?
A development of better irrigation techniques

B distribution of international food aid
C high trade barriers imposed by high-income countries
D higher prices for agricultural produce
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
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
27 A government is faced with an unwanted deficit on the current account of its balance of
payments.
Which action is most likely to reduce the deficit?
A raising government spending on welfare benefits

B reducing income tax
C restricting imports by raising tariffs
D revaluing its currency
© UCLES 2020 0455/11/O/N/20

9
28 What is meant by a depreciation in the foreign exchange rate?
A The government intervenes to reduce the exchange rate of the country’s currency.
B The rate of exchange of exports for imports for a country deteriorates.
C The rate of inflation in a country continues to rise.
D The value of a country’s currency falls on the international exchange market.
29 The table shows information from a country’s current account of its balance of payments.
$ billion
exports of goods 20
imports of goods 24
net services +5
net primary income –8
net secondary income –8
What is the country’s current account balance?
A +$1 billion B –$4 billion C –$7 billion D –$15 billion
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
© UCLES 2020 0455/11/O/N/20

Cambridge IGCSE™
ECONOMICS 0455/12
45 minutes

*4376822826*

Soft clean eraser
INSTRUCTIONS
INFORMATION
IB20 11_0455_12/4RP
2
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
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
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
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.
© UCLES 2020 0455/12/O/N/20

3
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
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.
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

4
price
($)
S
12
10
0 100 140
quantity
(units)
A 0.5 B 0.75 C 1.4 D 2.0
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
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
© UCLES 2020 0455/12/O/N/20

5
income spending
3000 3150
3300 3375
3600 3500
3900 3825
4200 4050
4500 4275
A $3000 B $3600 C $3900 D $4200

C the exchange rate
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

6
variable cost ($) 100 190 270 350
A $650 B $1000 C $1650 D $2000
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
15 Who owns a public sector organisation?
A individuals
B shareholders
C specialist managers
D the government
whole economy?


© UCLES 2020 0455/12/O/N/20

7
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
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
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

8
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


© UCLES 2020 0455/12/O/N/20

9
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

four countries.
country
A 10 35 55
B 20 60 20
C 35 35 30
D 40 40 20
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.

10
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
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
30
$m 25
key
20
exports of goods
15
imports of goods
10
0
1 2 3 4 5
year
© UCLES 2020 0455/12/O/N/20

Cambridge IGCSE™
ECONOMICS 0455/13
45 minutes

*6621734310*

Soft clean eraser
INSTRUCTIONS
INFORMATION
IB20 11_0455_13/3RP
2
1 Why do consumers have to make choices when spending their income?
A Advertising encourages consumer spending.

B Consumers have unlimited incomes.
C Consumer wants cannot all be satisfied with their income.
D Not all products will be attractive to consumers.
2 What is the key role of an entrepreneur?
A inventor
B risk taker
C shareholder
D worker
3 The diagram shows the production possibility curve (PPC) of an economy producing at point X.
capital 100
goods
X
70
0
0 180 240
consumer
goods
What would be the opportunity cost of moving from point X to produce only consumer goods?
A 60 units of consumer goods

B 70 units of capital goods
C 100 units of capital goods
D 180 units of consumer goods
© UCLES 2020 0455/13/O/N/20

3
4 Economics is divided into two: microeconomics and macroeconomics.
statement 1 When the price of oil falls there is an expansion in demand.
statement 2 The Organization of the Petroleum Exporting Countries (OPEC) can

influence the price of oil.
Which combination correctly describes these two statements?
statement 1 statement 2
A macroeconomic statement macroeconomic statement

B macroeconomic statement microeconomic statement
C microeconomic statement macroeconomic statement
D microeconomic statement microeconomic statement
5 What is a disadvantage of a market economic system?
A Entrepreneurs lack incentives to produce what consumers want.

B Government intervention will reduce the efficiency of firms.
C Market dominance by firms can lead to higher prices.
D There is underproduction of demerit goods.
6 The diagram shows the demand curve for coffee in the US.
price
P1
P2
demand for coffee
O Q1 Q2 quantity
Why did the quantity demanded move from Q1 to Q2?
A Coffee became cheaper.

B Incomes rose in the US.
C There was a successful advertising campaign by coffee retailers.
D The price of substitutes for coffee rose.

4
7 In an African country with large areas of tropical desert the price elasticity of demand for salt is
highly inelastic. This will result in greater consumer expenditure on salt when price changes from
P1 to P2.
Which diagram illustrates this situation?
A B
price price
of salt of salt
P2 P2
P1 P1
D
D
O quantity O quantity
C D
price price
of salt of salt
P2 P2
P1 D P1
D
O quantity O quantity
8 In which occupation would wages tend to increase?
A in those where a worker is paid weekly

B in those where a worker needs less training
C in those where there is an excess demand for labour
D in those where work becomes less dangerous
9 Which row shows a characteristic of money and a function of money?
characteristic function
A acceptability medium of exchange

B cash measure of value
C divisibility portability
D store of value bank deposit
© UCLES 2020 0455/13/O/N/20

5
income spending
3000 3150
3300 3375
3600 3500
3900 3825
4200 4050
4500 4275
A $3000 B $3600 C $3900 D $4200

C the exchange rate
12 The table shows the total cost of firm X at each level of output.
output total cost
0 3
1 5
2 6
3 9
At which level of output does total variable cost exceed total fixed cost?
A 0 B 1 C 2 D 3
variable cost ($) 100 190 270 350
A $650 B $1000 C $1650 D $2000

6
14 Which combination is usually found in a monopoly?
A many buyers and many sellers

B many buyers and single seller
C single buyer and many sellers
D single buyer and single seller
15 What is usually considered to be an advantage to a firm of using division of labour?
A high labour turnover

B increased mechanisation
C movement of labour between tasks
D need for quality control
whole economy?


18 A government decreased the tax on all goods produced in its country.
What is the most likely consequence of this?
A a decrease in exports
B an increase in imports
C an increase in production
D a worsening of the balance of trade in goods
© UCLES 2020 0455/13/O/N/20

7
19 Which government policy measure would cause an increase in a country’s supply of labour?
A increasing unemployment benefits

B lowering interest rates
C raising income tax
D raising the age of retirement
20 Due to a rise in the number of retired people, there has been increased demand for some
government expenditure.
Which type of government expenditure is most likely to be directly affected?
A defence
B health services
C re-training grants
D street lighting
21 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

8


24 One of the indicators of living standards is the Human Development Index (HDI).
What is not taken into consideration when calculating the HDI?
A education
B income per head
C level of savings
D life expectancy

© UCLES 2020 0455/13/O/N/20

9
four countries.
country
A 10 35 55
B 20 60 20
C 35 35 30
D 40 40 20
27 What would not be included in the current account of the balance of payments?
A dividends earned from a firm in another country

B imports of TVs from another country
C purchase of a house in another country
D rents paid to owners of land in another country
28 What is most likely to discourage international specialisation and trade for an economy?
A decreasing labour supply

B decreasing transport costs
C increasing oil prices
D increasing trade barriers
29 Many low-income countries rely on multinational companies (MNCs) to provide economic

development.
What is a disadvantage of this for the low-income country?
A Local firms close because MNCs are more efficient.

B New production techniques are introduced.
C The balance of payments may improve.
D The MNCs have to pay taxes on their profits.

10
30
$m 25
key
20
exports of goods
15
imports of goods
10
5
0
1 2 3 4 5
year
© UCLES 2020 0455/13/O/N/20

ECONOMICS 0455/12
45 minutes
Soft clean eraser
*9220423845*

IB16 11_0455_12/3RP
2
1 Each factor of production earns an income.
What correctly identifies the income for labour and capital?
labour capital
A profit interest
B rent profit
C wages profit
D wages interest
2 What could be the opportunity cost of a nuclear power station?
A the running costs of the power station
B a coal-fired power station

C the current value of the power station
D the cost of building the power station
3 The diagram shows a production possibility curve for maize and cotton.
maize P Q
R S
O cotton
Bad weather causes a poor harvest for both crops.
Which movement could be used to represent this change?
A P to R B Q to R C S to Q D S to R
4 The market for a good was in equilibrium. A change occurred which resulted in a new equilibrium
with a higher price for the good and a lower quantity traded.
What change would have caused this?
A the demand curve moved to the left

B the demand curve moved to the right
C the supply curve moved to the left
D the supply curve moved to the right
© UCLES 2016 0455/12/O/N/16

3
5 A demand curve shows the relationship between the quantity demanded and
A a change in income
B consumer tastes
C the supply of the product
D the price of the product
6 A government subsidises the production of pineapples.
This is likely to
A increase the price of pineapples

B raise the costs of supplying pineapples
C raise revenue for the government
D cause the supply of pineapples to increase at every price
7 What indicates the existence of external costs in an economy?
A An international trade deficit has caused the country to be in debt.

B National companies have borrowed from foreign investors.
C Private costs of production are less than social costs.
D Private costs of production are more than social benefits.
8 What might be a disadvantage to a trade union when arguing for an increase in its members’ pay?
A an increase in imports of a cheaper, similar product

B the closure of a local training college resulting in fewer potential workers
C the development of a new and profitable brand of the company’s product
D the development of new techniques that increase productivity
9 What shows the correct examples of income and wealth?
income wealth
A dividends from shares wages

B rent from a house overtime payments
C overtime payments wages
D wages house

4
10 Nazmin Uddin works in a local office as a secretary three days a week. She lives with her parents
in a small apartment.
Meer Ali owns a successful fitness centre that employs about twenty people. He owns a large
house.
Which is most likely to be correct?
A Nazmin spends a smaller proportion of her income than Meer.

B Nazmin saves most of her income.
C Nazmin would find it easier than Meer to borrow money.
D Nazmin has a lower disposable income than Meer.
income spending
4000 4150
4300 4375
4600 4650
4900 4900
5200 4975
5500 5275
What is the first level of income shown at which savings are positive?
A $4000 B $4600 C $4900 D $5200
12 A survey of managers in the USA revealed that most businessmen feel that a company’s
responsibility is ‘to serve the interests of owners, employees, customers and the public’.
The idea of profit maximisation, in contrast, implies that a company’s main responsibility should
be to the
A customers
B employees
C owners
D public
© UCLES 2016 0455/12/O/N/16

5
13 Some agricultural co-operatives have changed from labour-intensive to capital-intensive methods

of production.
What might be a cause of this change?
A Average productivity of agricultural workers has increased.

B Farming equipment has become more efficient.
C People are eating less food for health reasons.
D Some agricultural land has been sold for housing.
14 A firm has fixed costs of $200 for its daily output. The table shows its daily total variable costs.
total variable costs ($) 300 400 700 800
What can be concluded about the firm’s average total cost?
A it falls continuously
B it is highest at output 4 units
C it is lowest at output 4 units
D it rises continuously
15 The table shows the growth rate of output (%) in four sectors of an economy.
construction energy manufacturing services

sector % sector % sector % sector %
first quarter of 2014 0.9 0.1 –0.7 –3.4

second quarter of 2014 0.5 1.6 –0.5 0.5
Which two sectors showed an increase in the growth rate in the first half of 2014?
A construction and energy

B construction and manufacturing
C services and construction
D services and manufacturing

6
16 A government decides to sell the monopoly supply of gas to households to a private firm.
How could the government protect the interests of households after selling a large company to
the private sector?
A by excluding all competition from foreign companies

B by imposing a tax on excess profits
C by introducing a quota system for imports of gas
D by removing price controls on gas
17 In 2015, 70 000 extra people lost their jobs but total employment rose by 75 000. What could
explain this?
A Some people may have emigrated.

B Some people may have gone back to education.
C Some people may have re-entered the labour force.
D Some people may have retired early.
18 The table shows taxes as a percentage of Gross Domestic Product (GDP) for four countries.
From this information, which country had the highest percentage of direct taxation as a
percentage of GDP?
tax on tax on goods

income tax tax on
business and services
% dividends %
profits % %
A 12 14 2 5
B 14 15 2 14
C 17 13 5 10
D 18 10 1 10
© UCLES 2016 0455/12/O/N/16

7
19 A government gives farmers a subsidy of $5 per kilo to supply food on the open market where X
is the original equilibrium position.
The effect is illustrated in the diagram.
S3 S1
20 S2
X
15
price
($ per kilo) 10 D1
0
4 8 12 16 20 24
quantity supplied
(000 kilos)
What will be the new equilibrium price and quantity supplied as a result of the subsidy?
equilibrium price quantity supplied

($ per kilo) (000 kilos)
A 10 16
B 13 20
C 15 16
D 20 8
20 What is involved in the construction of a Retail Price Index?
A a base year
B incomes
C price elasticity of products
D quantity supplied
21 Why is nominal Gross Domestic Product not a good measure to compare the standard of living in
a country between two years?
A It does not account for inflation.

B It does not allow for savings.
C It does not include government expenditure.
D It only compares export prices with import prices.

8
22 In 2010 there was an increase in net emigration from Ireland.
What is most likely to have caused this increase?
A a decrease in job security abroad

B a decrease in wage rates abroad
C an increase in Ireland’s real GDP
D an increase in unemployment in Ireland
How is this accounted for in the construction of a Retail Price Index?
A by deducting the goods and services

24 Which outcome is least likely to be found with greater economic development?
A A greater percentage of the population are highly educated.

B A greater percentage of the population are homeowners.
C A greater percentage of the population are old.
D A greater percentage of the population are very poor.
25 A government introduces state benefits for the unemployed and increases the top rate of income
tax to pay for the benefits.
What effect will these changes have on poverty and the tax system?
poverty tax system
A increase make it more progressive

B increase make it more regressive
C reduce make it more progressive
D reduce make it more regressive
© UCLES 2016 0455/12/O/N/16

9
26 The chart shows total world carbon emissions in 1995 and predicted emissions by 2035.
1995 2035
other Asia
6%
developing developing
world world
27% 50%
other US
Latin
China US Asia
America 4% 15%
11% 22% 14% W.
Africa 3% China Europe
Middle East 17% 12%
W. Europe
3% 17% E. Europe
E. Europe 19%
Japan Africa
27%
7% 8%
Latin
America
6% developed
developed world
world 50%
Middle Japan
73%
East 4%
5%
If the chart proves to be correct, what will have happened by 2035?
A Africa and the Middle East will have responsibility for the same amount of carbon emissions
in 2035 as in 1995.
B Between 1995 and 2035, the Middle East will have increased its industrialisation by as much
as Latin America.
C By 2035 the combined percentage of carbon emissions caused by Africa and Latin America
will have doubled.
D The US will have decreased its carbon emissions by a smaller percentage than Western
Europe.
27 What encourages international specialisation?
A a foreign exchange shortage

C free trade
D quotas

10
28 A Japanese car manufacturer decided to produce its cars in a factory in Europe.
What would not be a reason why they might have chosen to do this?
A cheaper wage costs in Europe
B the availability of raw materials

C to gain external economies from skilled labour in Europe
D to increase Japanese self-sufficiency
29 A government removed the quota on goods imported into the country.
What is the most likely result of this?
A a decrease in demand for domestic production

B a decrease in domestic unemployment
C a decrease in exports
D a decrease in the balance of trade deficit
30 The table shows components of Japan’s current account balance in trillion Yen for 2011 and
2012.

balance of goods
year services current transfers income
¥ trillion
2011 –1.61 –1.76 –1.11 14.04

2012 –5.23 –2.33 –1.02 13.55
A balance of current transfers

B balance of goods
C balance of income
D balance of services
© UCLES 2016 0455/12/O/N/16

ECONOMICS 0455/13
45 minutes
Soft clean eraser
*8243662981*

IB16 11_0455_13/5RP
2
1 What is not a factor of production?
A a $20 banknote
B an office
C a photocopier
D a secretary
2 What could be the opportunity cost of a nuclear power station?
A the running costs of the power station
B a coal-fired power station

C the current value of the power station
D the cost of building the power station
3 In 2014 private companies began to drill in areas of the country to exploit natural gas supplies
that were known to exist.
R
V
manufactured
goods S
T
U
O gas supplies
How might this decision be represented on the diagram which shows a production possibility
curve for the country?
A by a movement from R to S
B by a movement from R to V
C by a movement from S to T
D by a movement from U to V
© UCLES 2016 0455/13/O/N/16

3
4 The market for a good was in equilibrium. A change occurred which resulted in a new equilibrium
with a higher price for the good and a lower quantity traded.
What change would have caused this?
A the demand curve moved to the left

B the demand curve moved to the right
C the supply curve moved to the left
D the supply curve moved to the right
5 The demand for cocoa beans is price-inelastic.
What is most likely to decrease as a result of an increase in demand for cocoa beans?
A price of cocoa bean products

B production of cocoa beans
C profits of cocoa bean producers
D unemployment among cocoa bean farmers
6 A government subsidises the production of pineapples.
This is likely to
A increase the price of pineapples.

B raise the costs of supplying pineapples.
C raise revenue for the government.
D cause the supply of pineapples to increase at every price.

4
7 The use of cars in many cities creates negative externalities. The diagram shows the free market
equilibrium X1 and the socially efficient market equilibrium X2.
S2
S1
costs P2 X2
/ benefits
P1 X1
D
O
quantity
Using the diagram, which statement is correct?
A Socially efficient supply is S1 and the market price P1 is too high.

B Socially efficient supply is S1 and the market price P1 is too low.
C Socially efficient supply is S2 and the market price P1 is too high.
D Socially efficient supply is S2 and the market price P1 is too low.
8 What could increase the ability of a trade union to gain a pay rise for its members in a coat
factory?
A a decrease in the demand for coats

B a decrease in the number of people willing to work in the coat industry
C a decrease in the productivity of workers making coats
D a decrease in the sale of coat exports
9 What does net income mean?
A income after allowing for price changes

B income after paying regular household bills
C income less tax and government deductions
D income plus overtime payments
© UCLES 2016 0455/13/O/N/16

5
10 Nazmin Uddin works in a local office as a secretary three days a week. She lives with her parents
in a small apartment.
Meer Ali owns a successful fitness centre that employs about twenty people. He owns a large
house.
Which is most likely to be correct?
A Nazmin spends a smaller proportion of her income than Meer.

B Nazmin saves most of her income.
C Nazmin would find it easier than Meer to borrow money.
D Nazmin has a lower disposable income than Meer.
income spending
2600 2625
2900 2925
3200 3190
3500 3275
3800 3500
4100 3725
What is the first level of income shown at which savings are positive?
A $2600 B $2900 C $3200 D $3500
12 A survey of managers in the USA revealed that most businessmen feel that a company’s
responsibility is ‘to serve the interests of owners, employees, customers and the public’.
The idea of profit maximisation, in contrast, implies that a company’s main responsibility should
be to the
A customers.
B employees.
C owners.
D public.

6
13 Why is a firm in perfect competition a price taker?
A It has no information about market price.

B Its output is too small to have any effect on market equilibrium.
C There are few barriers to entry.
D There are only a few firms in the industry.
14 A firm produced 200 cars a week and employed 50 workers. A fall in demand caused the firm to
reduce its output to 160 cars a week and its labour force to 32.
What was the percentage change in the firm’s productivity?
A It fell by 20%.
B It fell by 25%.
C It increased by 20%.
D It increased by 25%.
15 A firm has fixed costs of $100 for its daily output. The table shows its daily total variable costs.
total variable costs ($) 200 360 500 720
What can be concluded about the firm’s average total cost?
A It falls continuously.
B It is highest at output 4 units.
C It is lowest at output 3 units.
16 A government decides to sell the monopoly supply of gas to households to a private firm.
How could the government protect the interests of households after selling a large company to
the private sector?
A by excluding all competition from foreign companies

B by imposing a tax on excess profits
C by introducing a quota system for imports of gas
D by removing price controls on gas
© UCLES 2016 0455/13/O/N/16

7
17 A government decides to increase the rate of income tax and spend the extra revenue on
providing training colleges.
How might this be described?
A as fiscal and monetary policy

B as fiscal and supply-side policy
C as fiscal, monetary and supply-side policy
D as monetary and supply-side policy
18 A government taxes farmers $12 per kilo when they supply food on the open market where X is
the original equilibrium position.
The effect is illustrated in the diagram below.
50
S4 S3 S1
S2
40
X
price 30
($ per kilo)
20
D1
10
0
10 20 30 40 50 60
quantity supplied
(000 kilos)
What will be the new equilibrium price and quantity supplied as a result of the tax?
equilibrium price quantity supplied

($ per kilo) (000 kilos)
A 20 40
B 25 50
C 35 30
D 40 20

8
19 The table shows taxes as percentages of Gross Domestic Product (GDP) for four countries.
From this information, which country had the lowest percentage of direct taxation as a percentage
of GDP?
tax on
income tax tax on tax on goods
business
% dividends % and services %
profits %
A 12 14 2 4
B 14 15 2 13
C 17 8 5 9
D 17 13 5 9
20 A newspaper reports that there has been an economic slump in an economy.
What would an economist expect the immediate effect to be?
A Production will decrease.

B Saving will decrease.
C Taxation will decrease.
D The population will decrease.
21 How is the pattern of employment likely to change when a country becomes more developed?
A from regular employment to seasonal employment

B from rural employment to urban employment
C from skilled employment to manual employment
D from tertiary employment to primary employment
22 In 2010 there was an increase in net emigration from Ireland.
What is most likely to have caused this increase?
A a decrease in job security abroad

B a decrease in wage rates abroad
C an increase in Ireland’s real GDP
D an increase in unemployment in Ireland
© UCLES 2016 0455/13/O/N/16

9
23 The table shows some economic indicators.
Which increase in the first indicator is most likely to lead to an increase in the second indicator?
first indicator second indicator
A budget surplus consumer saving

B consumer spending unemployment
C inflation trade surplus
D productivity living standards
24 What would be most likely to cause the population to decrease if other things remain constant?
A a decrease in the birth rate

B a decrease in the death rate
C an increase in net immigration
D an increase in the fertility rate
25 Developed countries have a high and increasing proportion of their population over the age of 65.
Which economic consequence will be most likely to result from this kind of population change?
A Government transfer payments will increase.

B More facilities will be needed to retrain workers.
C There will be a rise in the economic growth rate.
D The total savings in the economy will increase.

10
26 The chart shows total world carbon emissions in 1995 and predicted emissions by 2035.
1995 2035
other Asia
6%
developing developing
world world
27% 50%
other US
Latin
China US Asia
America 4% 15%
11% 22% 14% W.
Africa 3% China Europe
Middle East 17% 12%
W. Europe
3% 17% E. Europe
E. Europe 19%
Japan Africa
27%
7% 8%
Latin
America
developed 6% developed
world world
73% Middle Japan 50%
East 4%
5%
If the chart proves to be correct, what would have happened by 2035?
A Africa will emit the least carbon.

B China will cause about a third of the emissions of all developing areas shown.
C Developed areas will have reduced their absolute amount of carbon emissions.
D The US will have decreased its carbon emissions by a smaller percentage than Western
Europe.
27 What encourages international specialisation?
A a foreign exchange shortage

C free trade
D quotas
28 A Japanese car manufacturer decided to produce its cars in a factory in Europe.
What would not be a reason why they might have chosen to do this?
A cheaper wage costs in Europe
B the availability of raw materials

C to gain external economies from skilled labour in Europe
D to increase Japanese self-sufficiency
© UCLES 2016 0455/13/O/N/16

11
29 A government removed the quota on goods imported into the country.
What is the most likely result of this?
A a decrease in demand for domestic production

B a decrease in domestic unemployment
C a decrease in exports
D a decrease in the balance of trade deficit
30 In 2009 the exchange rate of the Singapore dollar changed from 1.49 = 1 US dollar to 1.43
Singapore dollars = 1 US dollar.
How would this affect the import prices and export prices for Singapore?
prices paid by Singapore prices paid to Singapore

for imports for exports
A decrease decrease
B decrease increase
C increase decrease
D increase increase
© UCLES 2016 0455/13/O/N/16

ECONOMICS 0455/11
45 minutes
Soft clean eraser
*8122657378*

IB17 11_0455_11/5RP
2
1 An oil company announced in 2015 that it was starting its drilling operations for oil deposits in the
Arctic Ocean.
What will be the effect of this?
A to increase the supply of raw materials

B to reduce the level of technology available
C to solve the economic problem
D to worsen resource allocation
2 A self-employed fortune teller earns a living by reading the palms of people’s hands.
Which factors of production are essential to this activity?
A capital and enterprise

B enterprise and labour
C labour and land
D land and capital
3 A country is operating at point X on its production possibility curve (PPC). A drought significantly
reduces agricultural output.
Which point represents the new position?
manufacturing A
output B
X
C
O
agricultural output
4 A government needs to decide how much to fine firms for causing the external costs of air
pollution in industrial areas.
Which external cost would be the most difficult to measure in monetary terms?
A the discomfort associated with breathing

B the expenditure on additional healthcare
C the loss of earnings due to illness
D the medical research into respiratory disease
© UCLES 2017 0455/11/O/N/17

3
5 What is an example of market failure?
A city centre congestion

B low economic growth
C rising prices
D trade deficits
6 The table illustrates the demand and supply for coffee in a market in Africa.
price per kg quantity demanded quantity supplied

($) (kg) (kg)
10 50 10
20 40 20
30 30 30
40 20 40
50 10 50
When the price rises from $20 to $30 per kg, what is the price elasticity of demand for coffee?
A 0.2 B 0.5 C 2.0 D 5.0
7 Between 2005 and 2015 the number of late-night music clubs in the UK fell from 3144 to 1733.
The causes were said to be the increase in the cost to clubs of planning regulations and the
increase in alternative ways of meeting people on social media.
How would the effect of these causes be shown on a demand and supply diagram for entrance to
late-night music clubs?
increase in
planning regulations
dating websites
A movement down shift of
the supply curve demand curve to left
B movement up movement up
the supply curve the demand curve
C shift of shift of
supply curve to left demand curve to left
D shift of shift of
supply curve to right demand curve to right

4
8 A job offers employees piecework, commission, paid holidays and a company pension.
Which are non-wage factors?
A commission and company pension

B company pension and paid holidays
C paid holidays and piecework
D piecework and commission
9 When will a trade union be most likely to succeed in achieving the aims of its members?
A when firms are trying to cut costs of production

B when the rate of unemployment in the country is high
C when trade union membership in the industry is compulsory
D when workers are unskilled
10 The typical pattern of income over a person’s whole lifetime is shown by which diagram?
A B C D
income income income income
O lifetime O lifetime O lifetime O lifetime
11 When choosing an occupation people often consider things other than the wage-rate.
What would not be a good match for the type of work that is desired?
desired aspect occupation
A detailed work; career structure lawyer

B outdoor lifestyle; regular hours farmer
C part-time hours; work with people supermarket assistant
D technical knowledge; responsibility telephone engineer
12 Which is an internal diseconomy of scale?
A a lack of communication in a firm

B a reduction of cost by buying in bulk
C a shortage of skilled labour in an area
D traffic congestion in a particular area
© UCLES 2017 0455/11/O/N/17

5
13 What is not likely in an industry with many small firms?
A high capital costs

B high level of competition
C low barriers to entry
D low research expenditure
14 A major computer company announced that its profits had fallen below the level predicted.
What might have caused this?
A increased advertising costs that greatly improved sales

B low prices that made the company’s product competitive
C new technology that reduced costs
D reduced sales and low prices
T
costs
O Q
output
At output Q, which distance represents the firm’s variable cost?
A QR B QT C RT D ST
16 What, when increased, will help a government to reduce the rate of inflation?
A budget deficit
B consumer spending
C income tax
D pensions

6
17 An economy has a deficit on its balance of trade in manufactured goods.
Which government policy will reduce this deficit?
A a decrease in subsidies paid to local manufacturers

B an increase in interest rates
C an increase in sales tax on locally manufactured goods
D an introduction of import duties on manufactured goods
18 The graph shows the percentage of income paid in taxation.
Which line represents a proportional tax?
A
% income B
paid in
taxation C
O income
19 What is most likely to decrease when employment increases?
A economic growth
B government welfare payments
C the price level
D the standard of living
20 Why is the Human Development Index (HDI) often considered to be better than Gross Domestic
Product (GDP) per head as a measure of living standards?
A GDP per head excludes economic growth.

B GDP per head ignores population growth.
C HDI includes more than the production of goods and services.
D HDI is calculated by the national government.
© UCLES 2017 0455/11/O/N/17

7
21 An economy is predicted to grow at a rate of 3% during the next year.
What is most likely to cause this growth?
A an increase in expenditure
B an increase in interest rates
C an increase in sales (goods and services) tax
D an increase in the government’s budget surplus
22 The diagrams show percentage employment in different sectors in two countries.
country X country Y
percentage 70 percentage 70
employed employed
60 60
50 50
40 40
30 30
20 20
10 10
0 0
primary secondary services primary secondary services
Which statement is correct when comparing country X and country Y?
A Country X employs more workers in secondary industry than country Y.

B Country X produces more primary output than country Y.
C Country Y is more developed than country X.
D Country Y produces more secondary output than country X.
23 Which policy aims to maintain low inflation over a period of time?
A imposing a minimum wage to be paid to workers

B reducing interest rates to encourage borrowing
C restricting the supply of money through the central bank
D writing off the debts of low-income countries

8
24 What most accurately measures the international purchasing power of a currency?
A the balance of payments

B the exchange rate
C the gross domestic product
D the rate of inflation
25 The charts show the population structure of a country in 1960 and 2015.
1960 2015
male age female male age female
85+ 85+
80 – 84 80 – 84
75 – 79 75 – 79
70 – 74 70 – 74
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
What decreased between 1960 and 2015?
A average age
B number of people below 15
C number of people over 60
D total population
© UCLES 2017 0455/11/O/N/17

9
26 The table gives information about four countries.
Which country is likely to be most developed?
GDP per head % of labour force

life expectancy
(US$) in agriculture
A 52 450 50
B 54 490 40
C 60 550 15
D 60 500 25
27 What is a benefit of tariffs?
A increased choice
B increased government revenue
C more competition
D more trade
28 What is a country said to have if the value of its exported goods exceeds the value of its imported
goods?
A a surplus on its balance of payments

B a surplus on its balance of trade
C a surplus on its capital account
D a surplus on its current account
29 An Argentine product initially sells in the US for $50 when the exchange rate between the two
countries is 5 pesos to 1 dollar
The exchange rate changes to 10 pesos to 1 dollar and the price of the product remains
unchanged in Argentina.
What will be the new price of the product in the US?
A $5 B $25 C $100 D $500

10
30 The UK wants to increase exports to the US.
What action will achieve this?
A borrowing US dollars from international banks

B devaluing UK pounds against the US dollar
C placing a quota on imports from the US
D selling US dollars to buy UK pounds
© UCLES 2017 0455/11/O/N/17

ECONOMICS 0455/12
45 minutes
Soft clean eraser
*2094163331*

IB17 11_0455_12/5RP
2
1 Economists refer to factors of production.
Which is not a factor of production?
A the fields of a farm

B the machinery in a factory
C the shares of a company
D the staff in an office
2 A government allowed a building company to construct new houses which destroyed an area
designated as an area of natural beauty.
Which concepts can be applied to this statement?
A budget surplus; public sector

B external cost; opportunity cost
C government subsidy; mixed economy
D private enterprise; budget deficit
3 The diagram shows a production possibility curve. The country is using all its resources to
produce both manufactured goods and services.
K
manufacturing
M
L
N
O services
What movement would represent an improvement of technology in manufacturing?
A K to N B L to K C N to K D N to M
4 What is the government most likely to produce in a mixed economy?
A all of the services and none of the goods

B amounts of goods and services equal to those of the private sector
C no goods and services
D some of the goods and services
© UCLES 2017 0455/12/O/N/17

3
5 Which of the effects of economic development is an external cost?
A higher employment
B higher fixed costs
C increased production
D increased traffic congestion

($) (kg) (kg)
10 50 10
20 40 20
30 30 30
40 20 40
50 10 50
A 0.2 B 0.5 C 2.0 D 5.0
7 It was reported that the supply of oil would be affected by the discovery of new oil fields and
demand would be affected by rapid global economic growth.
If point X is the initial equilibrium point, which point could represent the new equilibrium?
price
S2
B S1
A
S3
X
C
D
D3
D2 D1
O
quantity

4
8 What is likely to decrease the level of saving in an economy?
A an increase in the general level of income

B an increase in the number of cheap offers in shops
C a redistribution of income from poor to rich households
D a rise in the rate of interest
9 Which change will make a manufacturing company replace machines with labour to maintain the
most efficient combination of factors of production?
A The price of the product manufactured has increased.

B The productivity of labour has increased.
C The productivity of machinery has increased.
D The wages of labour have increased.
10 Although there are higher paid jobs in offices many workers stay in low-paid jobs on farms.
What might explain this in developing economies?
A Agricultural workers lack the necessary education and skills.

B Governments plan to increase indirect taxes on services.
C Manual workers are being replaced by machines.
D Workers on farms have high labour mobility.
© UCLES 2017 0455/12/O/N/17

5
11 The diagram shows two curves. One is the demand for labour, the other is the supply of labour. A
government fixes a minimum wage (MW) that must be paid by employers.
wage
W
MW
O labour employed
What will be the effect of this minimum wage?
A fewer workers will be employed

B no change in the market equilibrium
C no worker will be paid wage W
D supply of labour will exceed demand

13 What distinguishes a multinational company from other types of company?
A It exports its products.

B It imports its raw materials.
C It produces outside its country of origin.
D It promotes its products in trade fairs abroad.


6
15 The table shows the variable costs of a firm. It can sell the units for $5 each. Its fixed costs are
$10.
quantity produced (units) 10 11 12 13

variable cost ($) 20 30 40 50
How many units will the firm produce to maximise profits?
A 10 B 11 C 12 D 13
A budget deficit
B consumer spending
C income tax
D pensions
17 The government introduces a new tax. It adds $1 to the price of every $10 good and $2 to the
price of every $20 good.
What can be concluded about the nature of this tax?
it is a it is a it is a
direct tax specific tax progressive tax
A no no no
B no no yes
C yes yes no
D yes yes yes
© UCLES 2017 0455/12/O/N/17

7
A
% income B
paid in
taxation C
O income
19 A worker earns $40 000 a year and pays 20% income tax.
He spends $5000 on electrical goods and $10 000 on a car, and pays 20% sales tax on each.
How much indirect tax does he pay?
A $3000 B $5000 C $8000 D $11 000

21 A finance minister reported that the economy was experiencing inflation and economic growth.
What would be evidence that both of these had occurred?
A increased exports and increased output

B increased imports and increased income tax
C increased interest rates and increased net migration
D increased prices and increased employment

8
country X country Y
employed employed
60 60
50 50
40 40
30 30
20 20
10 10
0 0

23 What would be a cause of cost-push inflationary pressure in an industry which supplies mobile
(cell) phones?
A an increase in advertising expenses for mobile phones

B an increase in export duties on mobile phones
C an increase in income taxes on wages of employees
D an increase in world demand for mobile phones
24 What is most likely to cause an increase in the population growth of a developing country?
A a decrease in immigration
B a decrease in the birth rate
C a decrease in the death rate
D a decrease in the standard of living
© UCLES 2017 0455/12/O/N/17

9
1960 2015
85+ 85+
80 – 84 80 – 84
75 – 79 75 – 79
70 – 74 70 – 74
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
A average age
D total population
26 At the start of the year a developing country had a population of 1 000 000, its birth rate was 16.0
per thousand per annum and its death rate was 8.0 per thousand per annum. At the end of the
year the population was 1 005 000.
What could explain this change in the population?
A The birth rate rose.

B The death rate fell.
C There were 3000 emigrants.
D There were 5000 immigrants.

10
A increased choice
C more competition
D more trade
28 Which name is given to the external value of a currency in terms of another currency?
A the balance of trade

B the exchange rate
C the relative inflation rate
D the supply of money
29 It was reported in 2011 that the United States (US) needed to achieve a lower current account
deficit.
What would help this in the short run?
A a protectionist policy
B a strong exchange rate
C increased private sector spending
D investment in the US by multinational firms
30 The table shows the number of units of foreign currency that the UK pound (UK£) could buy in
August 2012 and August 2013.
rate per UK£ rate per UK£

currency
August 2012 August 2013
Argentine peso 7.16 8.35

South African rand 12.86 14.97
euro 1.27 1.14
What can be concluded from the table about the change in currency values between 2012 and
2013?
A The Argentine peso appreciated against the UK pound.

B The Argentine peso depreciated against the euro.
C The euro depreciated against the UK pound.
D The South African rand appreciated against the euro.
© UCLES 2017 0455/12/O/N/17

ECONOMICS 0455/13
45 minutes
Soft clean eraser
*4006185780*

IB17 11_0455_13/5RP
2
1 What does an economist mean by the factor of production called capital?
A goods that can be used to produce other goods

B money used to start a business
C resources that cannot be replaced
D the profits of a company
2 A government decides to spend more on defence and cannot spend money on a new airport.
A budget surplus; external cost

B factor of production; private monopoly
C public sector; opportunity cost
D trade surplus; budget deficit
3 The diagram shows a production possibility curve diagram. A country’s initial position is X.
services
R
X
T
O manufacturing
Better manufacturing processes are introduced and the country improves its tourist facilities.
What would represent this?
A S to T B T to R C X to R D X to T
4 What might be an external cost of drinking alcohol?
A the cost of a bottle of wine

B the risk of illness from drinking alcohol
C the risk of street violence
D the tax paid to the government
© UCLES 2017 0455/13/O/N/17

3
5 What is a benefit of the market system?
A Competition ensures choice for consumers.

B Prices equal supply costs.
C Unemployment is kept to a minimum.
D Wage differentials are small.

($) (kg) (kg)
10 50 10
20 40 20
30 30 30
40 20 40
50 10 50
A 0.2 B 0.5 C 2.0 D 5.0
7 In recent years the price of crude oil on the world market has fallen dramatically. One cause has
been the increase in oil obtained by the new extraction process of fracking.
How is this shown on a demand and supply diagram of the market for crude oil?
A a shift in the demand curve to the left

B a shift in the demand curve to the right
C a shift in the supply curve to the left
D a shift in the supply curve to the right
8 What is the best example of specialisation?
A a diversified engineering company

B a general repairs handyman
C a self-sufficient, non-trading country
D an old person’s helper and care assistant

4
9 Which workers are most likely to gain the highest increase in wages from a pay rise of 2%?
A airline pilots
B farm workers
C nurses
D shop assistants
10 A female accountant in a private firm earns $80 per hour; a male Professor of Finance in a
government university earns $40 per hour. Each works the same number of hours.
What could explain the difference in earnings?
A It is difficult to measure the output per hour in each profession.

B Pay in the private sector is profit-related but is not in the public sector.
C Qualifications of accountants are lower than those of Professors of Finance.
D Women are generally given preference over men in professional jobs.
11 Each of the four sets of descriptions in the table refers to a person applying for a job.
Which person is likely to receive higher pay?
A skilled experienced younger worker

B skilled inexperienced older worker
C unskilled experienced older worker
D unskilled inexperienced younger worker

© UCLES 2017 0455/13/O/N/17

5
13 Private multinational clothing companies operate in developing countries to reduce their average
costs of production.
Which feature of developing countries attracts them for this purpose?
A In developing countries, clothing workers receive low wages.

B In developing countries, foreign managers are allowed to pay no income tax.
C In developing countries, multinationals are allowed to take profits out of the country.
D In developing countries, there is a large market for fashion clothing.

15 An entrepreneur buys a workshop for $10 000 to make picture frames. In the first year he spent
$40 000 on materials and employed two workers. He paid the workers for each frame produced
with a total cost of $30 000. He bought a vehicle to deliver the frames for $10 000.
What were his total variable costs?
A $40 000 B $70 000 C $80 000 D $100 000
A budget deficit
B consumer spending
C income tax
D pensions
17 Which policy is most likely to increase the level of economic activity?
A increasing the exchange rate

B increasing the rate of interest
C reducing government spending
D reducing the general tax level

6
A
% income B
paid in
taxation C
O income
19 A government collects the following revenue in a year.
$m
customs duties 100
taxes on goods 200
taxes on income 400
taxes on services 300
What is the amount of indirect tax revenue?
A $200 m B $400 m C $500 m D $600 m

21 What may cause an immediate increase in the working population?
A a higher birth rate

B a higher death rate
C a higher fertility rate
D a higher rate of net immigration
© UCLES 2017 0455/13/O/N/17

7
country X country Y
employed employed
60 60
50 50
40 40
30 30
20 20
10 10
0 0

23 What is likely to fall when the rate of unemployment falls?
A business confidence
B consumer spending
C government revenue
D government welfare payments
24 The birth rate and death rate in a country are the same.
What is likely to happen if there is a decrease in the birth rate, while the death rate and migration
remain the same?
A population structure will remain the same

B population will decrease
C the standard of living will decrease
D the working population will increase

8
1960 2015
85+ 85+
80 – 84 80 – 84
75 – 79 75 – 79
70 – 74 70 – 74
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
A average age
D total population
© UCLES 2017 0455/13/O/N/17

9
26 The table shows the Consumer Prices Index (CPI) for selected cities for August 2015 relative to
New York, USA at 100.
city CPI
Geneva, Switzerland 137

Oslo, Norway 105
Sydney, Australia 89
Singapore 88
Istanbul, Turkey 48
Johannesburg, South Africa 48
Lima, Peru 44
A Geneva had the highest average price level.

B Living standards were highest in Lima.
C Singapore was more expensive than Oslo.
D The annual rate of inflation was the same in Istanbul and Johannesburg.
A increased choice
C more competition
D more trade
28 What is an increase in the value of an exchange rate of a currency in a floating system called?
A appreciation
B depreciation
C devaluation
D revaluation

10
29 A developing economy has a surplus on its trade in goods of $75 billion and a deficit on its trade
in services of $25 billion, while its current account is in overall balance.
Which values for net income (primary income) and net transfers (secondary income) result in the
current account being in balance?
net income net transfers
A deficit of $20 billion surplus of $120 billion

B deficit of $30 billion deficit of $70 billion
C surplus of $35 billion surplus of $15 billion
D surplus of $40 billion deficit of $90 billion
30 What policy would encourage greater international specialisation?
A the promotion of industrial diversification

B the protection of new businesses
C the reduction of tariffs
D the subsidising of service industries
© UCLES 2017 0455/13/O/N/17

ECONOMICS 0455/11
45 minutes
Soft clean eraser
*6739542274*

IB18 11_0455_11/3RP
2
1 Which factor of production involves risk-taking?
A capital
B enterprise
C labour
D land
2 What is the basic problem facing all economies?
A how to achieve a stable balance of payments

B how to maximise tax revenues
C how to reach full employment
D how to use scarce resources
3 The diagram shows the production possibility curve (PPC) for an economy.
capital goods
X
Z
O
consumer goods
What will happen to the opportunity cost of producing more units of consumer goods in terms of
capital goods as the economy moves down its PPC from point X to point Z?
A It will decrease continuously from point X to point Z.

B It will decrease up to point Y and then increase towards point Z.
C It will increase continuously from point X to point Z.
D It will increase up to point Y and then decrease towards point Z.
© UCLES 2018 0455/11/O/N/18

3
4 An economy operates entirely as a market system.
Which type of service would not be provided in such an economy?
A commercial banking services

B free government health services
C private educational services
D profitable retail services
5 The diagram shows the equilibrium market price PE and quantity QE for rice in a country.
price
S
P1
PE
O QE
quantity
Which government action could cause the market price for rice to become P1?
A encouraging the export of rice from the country

B imposing a maximum price below the market price for rice
C providing a subsidy to farmers to produce more rice
D reducing import tariffs on rice
6 A major highway has been built at a cost of US$175 million between Nairobi, Kenya and its
suburbs. This reduces travel time and increases safety, but there are environmental problems for
small enterprises along its route.
Who bears the external costs of this project?
A the authorities who paid for the highway

B the commuters who travel to work in Nairobi
C the construction companies that built the highway
D the small enterprises along the route

4
7 The table shows the demand and supply for spices in a market in Africa.
price quantity quantity

per kg (US$) demanded (kg) supplied (kg)
10 50 10
20 40 20
30 30 30
40 20 40
When the price rises from US$20 to US$30 per kg, what is the price elasticity of demand (PED)
for spices?
A 0.25 B 0.5 C 1.0 D 2.0
8 What is a function of a central bank?
A collecting taxes
B issuing currency
C providing bank accounts for individuals
D setting foreign trade tariffs
9 What is most likely to increase the total output of a firm in the short run?
A a rise in the length of the working day

B a rise in the number of days holiday
C a rise in the school leaving age
D a rise in unemployment payments
10 What will make it harder for a trade union to increase the wage rate for its members, without
reducing employment?
A a switch from short-term to long-term fixed contracts of employment

B an increase in the number of substitutes for the product
C growth in an economy and increased demand for labour
D lower price elasticity of demand for the product
© UCLES 2018 0455/11/O/N/18

5
11 What is likely to assist a government’s policy of reducing inflation?
A allowing businesses to borrow money for longer periods

B encouraging the public to spend more money
C increasing lending to members of the public
D raising the interest rate on credit card borrowing
12 Which international market is closest to the model of perfect competition?
A diamonds
B foreign currency
C petrol (fuel)
D washing machines
13 Which form of production would be least likely to have the advantages of economies of scale?
A car manufacturing
B commercial cereal farming
C handmade jewellery
D refining of oil products
14 The table shows a firm’s average revenue and average cost at different levels of output.
When all output is sold, which level of output gives maximum profit?
output average average

(units) revenue (US$) cost (US$)
A 5 10 30
B 10 20 20
C 15 25 15
D 20 30 18
15 Which statement about total fixed cost is correct?
A It falls as output increases.

B It is calculated by adding total cost and total variable cost.
C It is calculated by dividing total cost by output.
D It must be paid even if output is zero.

6
16 What is a disadvantage of direct taxes?
A They can be a disincentive to work.

B They can be based on people’s ability to pay.
C They can be a major source of tax revenue.
D They can be progressive.
17 When is a government said to balance its budget?
A when all goods and services are taxed equally

B when economic growth is the same in all regions of the economy
C when its total income equals its total expenditure
D when total exports equal total imports
18 In the diagram, which level of subsidy per kilo would a government have to give to producers to
encourage them to increase production from 20 kilos per week to 30 kilos per week?
S1
price
(US$)
20 S2
15
12
0
0 20 30
kilos per week
A US$3 per kilo

B US$5 per kilo
C US$8 per kilo
D US$15 per kilo
© UCLES 2018 0455/11/O/N/18

7
19 In which case is success for the government in achieving the first aim likely to cause problems in
achieving the second?
first aim second aim
A full employment price stability

B high economic growth full employment
C price stability stable balance of payments
D stable balance of payments more even distribution of income
20 An increase in which economic indicator is usually taken as the measure of a country’s economic
growth?
A the balance of payments surplus

B the foreign exchange rate
C the government budget surplus
D the gross domestic product
21 What is used to measure inflation?
A the consumer prices index (CPI)

B the exchange rate
C the gross domestic product (GDP)
D the index of workers’ wages

8
22 The diagram shows the rate of unemployment and the periods of recession in a country between
1978 and 2012.
12
unemployment 10
rate %
8
key
6 recession years
0
1980 1990 2000 2010
What can be concluded from the diagram?
A Each recession lasted for more than two years.

B Recessions occurred at regular intervals.
C The unemployment rate peaked in a recession period.
D The unemployment rate rose during recession periods.
23 A country experienced its usual August increase in the rate of unemployment. Unfortunately this
was followed by the loss of jobs resulting from the regular downturn in global economic activity.
Which types of unemployment occurred?
first type of second type of

unemployment unemployment
(August) (global downturn)
A cyclical structural
B frictional seasonal
C seasonal cyclical
D structural frictional
24 Iran has recently experienced a natural increase in population.
What is the most likely cause of this increase?
A Emigration exceeded immigration.

B Immigration exceeded emigration.
C The birth rate exceeded the death rate.
D The death rate exceeded the birth rate.
© UCLES 2018 0455/11/O/N/18

9
25 The table shows some economic indicators.
Which combination of indicators is most likely to represent a developed country?
size of primary sector birth rate literacy rate

(% of GDP) (births per 1000) (% of population)
A 3 10 98
B 3 22 65
C 27 32 56
D 33 35 70
26 Developing countries are sometimes given aid by charities and foreign governments.
Which aid programme would be least likely to lead to long-term economic growth?
A the building of an irrigation system

B the construction of a new airport
C the distribution of gifts of food
D the training of technical staff
27 What is a valid economic argument in favour of trade protection?
A It allows greater consumer choice.

B It encourages trade liberalisation.
C It helps support infant industries.
D It keeps prices lower.
28 What is most likely to happen if South Korea builds a factory in Switzerland that becomes
profitable?
A South Korea’s imports of goods will decrease.

B South Korea’s investment income will increase.
C Switzerland’s trade balance in goods will worsen.
D Switzerland’s trade balance in services will improve.

10
29 Which government policy is most likely to improve a country’s balance of trade?
A a decrease in direct taxation

B a decrease in the exchange rate
C a decrease in the level of tariffs
D an increase in government expenditure
30 The table shows the tariffs imposed on imported tropical fruit in the European Union (EU)
according to the degree of processing.
EU tariffs
(% rate)
fresh tropical fruit 8.0

canned tropical fruit 11.3
bottled tropical fruit drinks 23.6
What might be the reason for this pattern of tariffs?
A to encourage imports of processed products into the EU

B to encourage tropical countries’ exports
C to help manufacturing industries in the EU
D to help tropical countries develop manufacturing industries
© UCLES 2018 0455/11/O/N/18

ECONOMICS 0455/12
45 minutes
Soft clean eraser
*1171988504*

IB18 11_0455_12/3RP
2
1 Which factor of production is not represented in the list shown?
bananas a factory goats a risk taking investor
A capital
B enterprise
C labour
D land
2 What do economies aim to achieve in tackling the economic problem of scarcity?
A equal balance between public and private sectors

B equal reward for equal effort
C increased competition in the use of resources
D optimum allocation of finite resources
3 The diagram shows a country’s production possibility curve (PPC).
capital goods
Z
X
O
consumer goods
A A movement from X to Y shows a decrease in efficiency in the economy.

B A movement from X to Z shows a discovery of new resources in the economy.
C A movement from Y to Z shows resources are being diverted from capital goods to consumer
goods.
D A movement from Z to Y shows an increase in efficiency in the economy.
© UCLES 2018 0455/12/O/N/18

3
4 China, the world’s second largest economy, is becoming more like a market economy.
Which policy would contribute directly to such a change?
A abolishing state control completely

B encouraging consumers to spend more and save less
C reducing exports and encouraging more imports
D transferring wealth from the state sector to the private sector
5 The diagram shows the market for a firm making clothing with an initial equilibrium of X.
What will be the new equilibrium if there is a successful advertising campaign by a rival firm and
an increase in workers’ wages?
S2
price
S1
S3
B
A C
X
D
D3
D1
D2
O quantity
6 Coal production in the UK has declined in recent years. One reason given for this is that the
social cost of coal production is too high.
What best describes the social cost of coal production?
A all the benefits of coal production minus all the costs of coal production
B the cost of the environmental damage caused by coal production
C the cost to the government of subsidising the coal industry
D the private costs of coal production plus the external costs of coal production

4

10 50 10
20 40 20
30 30 30
40 20 40
for spices?
A 0.25 B 0.5 C 1.0 D 2.0
8 A central bank acts as a lender of last resort especially in times of financial crisis.
What is the purpose of this function?
A to cover credit card debts of consumers

B to provide liquidity to the banking system
C to remove failing banks from the financial system
D to safeguard the profits of the banking system
9 What will cause the level of savings in an economy to rise?
A a fall in investment
B a fall in real wages
C a rise in income taxes
D a rise in interest rates
10 What could affect the size of the labour force in an economy?
A the existence of a trade union

B the government’s immigration policy
C the quality of university graduates
D the ratio of male to female employees
© UCLES 2018 0455/12/O/N/18

5
11 Petrol (fuel) retailers in a country have noticed a sharp increase in sales in August when many
people take their holidays.
Why might this take place?
A Consumers’ demand curve for petrol shifts to the left in August.

B Consumers’ demand curve for petrol shifts to the right in August.
C Oil refineries increase their output in August.
D Travel companies increase their hotel prices in August.
12 What is correct for firms in perfect competition?
A They achieve economies of scale.

B They are price takers.
C They make use of non-price competition.
D They produce differentiated products.
13 A film production company purchases a group of cinemas.
Of what is this an example?
A backward vertical integration

B conglomerate merger
C forward vertical integration
D horizontal integration

A 5 10 30
B 10 20 20
C 15 25 15
D 20 30 18

6

16 A government aims to reduce unemployment through a supply-side policy measure.
Which measure would it use?
A It would increase government spending.

B It would increase tariffs on imported goods and services.
C It would introduce retraining schemes.
D It would reduce the rate of interest.

18 The table shows the amount of tax paid as income rises in four countries, A–D.
Which country has a progressive tax?
amount of tax (US$) paid on income of:

10 000 20 000 30 000 40 000 50 000
A 2 000 4 000 6 000 8 000 10 000

B 2 000 6 000 12 000 18 000 25 000
C 4 000 4 500 5 000 5 500 6 000
D 4 000 7 000 9 000 10 000 12 000
© UCLES 2018 0455/12/O/N/18

7

20 Economic growth is usually measured by the annual change in
A consumer spending.
B gross domestic product.
C the output of the manufacturing and construction industries.
D the retail price index (RPI).
21 Four groups who are affected by changing economic conditions are creditors, debtors, exporters
and importers.
Which pair is most likely to be disadvantaged by a high rate of inflation?
A creditors and exporters

B creditors and importers
C debtors and exporters
D debtors and importers

8
1978 and 2012.
12
unemployment 10
rate %
8
key
6 recession years
0
1980 1990 2000 2010


C seasonal cyclical
24 What will lead to an ageing population if other factors remain unchanged?
A a fall in the birth rate

B a rise in the death rate
C an increase in the age of retirement
D an increase in the state pension
© UCLES 2018 0455/12/O/N/18

9
25 Which change is most likely to be expected when an economy is developing?
A birth rates increase rapidly

B poverty rates fall
C unemployment levels rise
D the primary sector overtakes the secondary sector

27 It is estimated that in 2016 the Olympic Games in Rio, Brazil attracted over 600 000 foreign
visitors.
What is likely to have been the result of this number of visitors?
A a depreciation of Brazil’s currency

B a fall in Brazil’s rate of inflation
C an increase in the Brazilian government’s budget deficit
D a reduction in Brazil’s deficit on the current account of its balance of payments
profitable?


10
29 A country has experienced a devaluation of its currency.
What are the likely results of the devaluation?
imports exports
A price decreases value decreases

B price decreases value increases
C price increases quantity decreases
D price increases quantity increases
EU tariffs
(% rate)


© UCLES 2018 0455/12/O/N/18

ECONOMICS 0455/13
45 minutes
Soft clean eraser
*9312534374*

IB18 11_0455_13/3RP
2
1 Which example of a factor of production in the fishing industry is correct?
factor example
A capital charges on loan for fishing boat

B enterprise salaries of fish warehouse managers
C labour profits of fish shop owners
D land fish in the sea
2 Hospital services are provided by the government and paid for through taxation. People cannot
always get the treatment they require because of long waiting lists.
A external cost
B market system
C perfectly inelastic supply
D scarcity
3 The diagram shows a production possibility curve (PPC) for an economy.
output of R
W Z
Y
X
O
output of S
Which change on the diagram could represent an increase in unemployment?
A W to X B W to Y C Y to X D Y to Z
4 Who determines what goods and services are produced in a market economy?
A consumers
B employees
C government
D trade unions
© UCLES 2018 0455/13/O/N/18

3
5 The diagram shows the demand for and the supply of air travel.
price of S
air tickets
$
D2
D1
O
number of
passengers
What could cause a shift of the demand curve from D1 to D2?
A an increase in airline costs

B an increase in airport taxes
D an increase in worldwide terrorism
6 In 2015, the world price of oil fell rapidly due to changes in the conditions of demand and supply.
One change was the use of a new method of extraction called fracking.
Which event would not have contributed to the fall in prices?
A China’s growth slowed leading to lower oil imports.

B Saudi Arabia increased the volume of its oil supplies.
C UK protest groups prevented the introduction of fracking projects.
D USA became more self-sufficient in oil due to fracking and reduced imports.

10 50 10
20 40 20
30 30 30
40 20 40
for spices?
A 0.25 B 0.5 C 1.0 D 2.0

4
8 What is a function of a country’s stock exchange?
A to act as lender of last resort to commercial banks

B to provide a market for the purchase and sale of shares
C to provide short-term loans for investment
D to set interest rates within the country
9 What might cause an increase in the earnings of a doctor in a government health service?
A an increasing number of doctors graduate from university each year

B an increasing number of people need health care
C the government spends less on the nation’s health services
D the population becomes more aware of healthy eating
10 What would put a trade union in a strong bargaining position to negotiate higher wages for its
members in a particular firm?
A The demand for the product produced by the workers has an inelastic demand.
B The economy is experiencing high unemployment.
C The proportion of the firm’s workers in the union is low.
D Wage costs are a high proportion of total costs for firms in the industry.
11 What is most likely to encourage the immediate purchase of an expensive item such as a new
car?
A anticipating a fall in the rate of inflation

B expecting interest rates to fall
C making it easier to obtain a loan
D needing to plan for unexpected emergencies
12 The table shows characteristics of a market.
What are the characteristics of a perfectly competitive market?
number number role

product
of buyers of sellers of firm
A identical many many price taker

B identical one many price maker
C similar many many price taker
D unique few few price maker
© UCLES 2018 0455/13/O/N/18

5
13 A computer chip manufacturer expands by taking over a computer chip designer.
A backward vertical integration

B diversifying integration
C forward vertical integration

A 5 10 30
B 10 20 20
C 15 25 15
D 20 30 18

16 What is most likely to be an example of a progressive tax?
A customs duties on imported goods

B excise duties on cigarettes
C income tax
D sales tax


6
18 A government aims to boost production and increase sales of steel by subsidising private
producers. A subsidy equal to W – Z per tonne is paid.
According to the diagram, what would be the value of sales of steel after the subsidy?
price supply of steel

(per tonne W supply after subsidy
of steel)
Z
P
P1
demand for steel
O Q Q1
quantity
(tonnes of steel)
A OP × OQ B OP1 × OQ1 C WZ × OQ D WZ × OQ1

20 When is a recession said to occur?
A Economic growth in the economy falls for at least two consecutive quarters.
B Gross domestic product (GDP) falls for at least two consecutive quarters.
C The current account of the balance of payment is in deficit for at least two consecutive
quarters.
D The government experiences a budget deficit for at least two consecutive quarters.
© UCLES 2018 0455/13/O/N/18

7
21 Which country is suffering from the worst deflation?
annual change in indicator

real GDP
unemployment
inflation per capita
rate
% (US$)
%
%
A –5 +3 –3
B –2 –2 –2
C +2 –3 +1
D +12 +10 +3
1978 and 2012.
12
unemployment 10
rate %
8
key
6 recession years
0
1980 1990 2000 2010


8

C seasonal cyclical
24 What is the most likely effect of raising the retirement age in a country?
A government spending increases

B net immigration increases
C spending on pensions increases
D working population increases
25 What describes absolute and relative poverty?
absolute poverty relative poverty

A when there are low birth rates, high death when there are high birth rates, low death
rates, and high levels of migration rates, and low levels of migration
B when a person does not have enough when a person earns less than
money for food, shelter, and clothes others in the same society
C when everyone has an when half the population has an
income below US$1.90 a day income of US$1.90 a day
D when necessities cannot be afforded when luxuries cannot be afforded

© UCLES 2018 0455/13/O/N/18

9
27 A government imposes a limit of 2 million on the number of smartphones imported into the
country.
Which term is given to this limitation?
A ban
B embargo
C quota
D tariff
profitable?

29 In July 2015, Australia’s balance of trade with the rest of the world was –2809 billion Australian
dollars. In January 2016 it was –3294 billion Australian dollars.
What describes Australia’s balance of trade over this period?
balance of trade trend
A deficit improving
B deficit worsening
C surplus improving
D surplus worsening

10
EU tariffs
(% rate)


© UCLES 2018 0455/13/O/N/18

ECONOMICS 0455/11
45 minutes
Soft clean eraser
*9863355565*

IB19 11_0455_11/3RP
2
1 What is classified as one of the four economic resources?
A consumption
B enterprise
C production
D trade
2 Countries X and Y have identical resources. The diagram shows their production possibility
curves.
food
O
drink
A X can produce food and drink more cheaply than Y.

B X experiences higher unemployment than Y.
C Y can produce food and drink more efficiently than X.
D Y has higher retail prices than X.
© UCLES 2019 0455/11/O/N/19

3
3 Sam wrote a list of how he would prefer to spend his Saturday afternoon.
first choice go to a cricket match

second choice watch the annual town parade
third choice go to the cinema
fourth choice visit relatives
Unfortunately a thunderstorm caused the cricket match and the town parade to be cancelled.
Sam went to the cinema.
What was the opportunity cost of going to the cinema?
A going to a cricket match

B watching the annual town parade
C visiting relatives
D losing his Saturday free time

5 In a city, what is most unlikely to be provided by the private market system?
A a museum
B a school
C a sports field
D street lights

4
6 The table shows the quantity demanded and supplied for a commodity at different prices.

($) demanded supplied
10 100 800
9 210 700
8 400 600
7 500 500
6 600 400
What would happen to the equilibrium price if the quantity supplied increased by 200 units at
each price?
A It would decrease by $1.

B It would decrease by $2.
C It would increase by $1.
D It would increase by $2.
7 The table shows the quantity that producers are willing to supply at different price levels.
price quantity
($) supplied
120 20
150 40
180 80
If the price increases from $120 to $180, what would be the price elasticity of supply?
A 0.16 B 4 C 6 D 60
8 What is an example of a non-wage factor?
A bonus
B commission
C fringe benefits
D overtime rates
© UCLES 2019 0455/11/O/N/19

5
9 An African government has abandoned its own dollar and now uses the US dollar as its currency.
Why would such a policy have been necessary?
A Commercial banks restricted their lending.

B Consumers only used credit cards rather than paper money.
C Its own dollar no longer acted as a store of value.
D The central bank controlled the issue of money too tightly.
10 The table shows how three people (X, Y and Z) spend their income.

income?
A X  Y Z
B YZX
C ZXY
D ZYX
11 A musician has a choice of playing for an orchestra in either Germany or England.
Which combination of incomes and cost of living is most likely to cause her to choose the
German orchestra?
Incomes and cost of living in Germany compared with those in England

pre-tax (gross) income after-tax (net) income cost of living
A higher higher higher

B higher lower lower
C lower higher higher
D lower higher lower

6
12 What must result from an increase in output?
A a decrease in the average cost

B a decrease in the total costs
C an increase in the fixed costs
D an increase in the variable costs
13 What is characteristic of a monopoly market structure?
A A monopolist may determine the price of its product.

B A monopolist’s product has many substitutes.
C There are no external costs.
D There is easy entry into the market.
14 The table shows the sales of cold drinks made by a company in the UK in 2016 and 2017.
Demand for cold drinks is influenced by changes in the temperature. In 2016 the sales followed
the usual seasonal pattern.
sales 2016 sales 2017

month
(thousand cans) (thousand cans)
April 300 290

May 400 350
June 550 270
July 570 490
August 620 590
In which month of 2017 was the usual pattern disturbed?
A May
B June
C July
D August
© UCLES 2019 0455/11/O/N/19

7
15 A firm producing bicycles has the following costs at different levels of output.
total fixed costs total variable costs

output
($) ($)
10 300 800
20 300 1500
30 300 3300
What happens to the average total cost over this range of output?
B It falls then rises.
C It rises continuously.
D It rises then falls.
16 One aim of government policy is to redistribute income through taxation in order to reduce
inequality.
Which policy will achieve this aim?
A Impose a tax of $0.20 on every dollar earned.

B Increase the tax-free allowances after which tax must be paid progressively.
C Introduce a tax on all food.
D Provide an incentive to earn by reducing taxes for the highest paid.
17 What is an example of expansionary monetary policy?
A a decrease in income tax rates

B a decrease in the budget deficit
C a decrease in the money supply
D a decrease in the rate of interest

8
18 Which actions would be likely to increase government expenditure and reduce revenues from
taxation?
government expenditure tax revenues
A improve health facilities for the elderly encourage people to reduce their spending
B increase the amount of the state pension increase VAT (sales tax)
C provide free bus transport for retired people encourage people to work beyond retirement
D raise the age of retirement decrease bus fares
19 The diagram shows the impact of a government imposing an indirect tax on a good. The original
demand curve is D1 and original supply curve is S1.
price S2
$ S1
60
50
40
D1
0 80 100
quantity
What is the total tax revenue gained by the government?
A $1600 B $3200 C $4800 D $5000
20 The chart shows the GDP annual growth rate (percentage), 2012–2016, for Greece.
2
growth 0
rate % –2
–4
–6
–8
–10
–12
2012 2013 2014 2015 2016
year
In which years did Greece experience the longest period of positive economic growth?
A 2012–2013 B 2013–2014 C 2014–2015 D 2015–2016
© UCLES 2019 0455/11/O/N/19

9
21 What are the components of the Human Development Index (HDI)?
A life expectancy at birth, expected years of schooling, GDP

B life expectancy at birth, expected years of schooling, GDP per head
C population growth, adult literacy rate, GDP per head
D population size, expected years of schooling, number of doctors per head
22 Which government policy would reduce economic growth?
A cutting the rate of corporation tax

B increasing expenditure on education
C lowering the rate of income tax
D raising interest rates
23 Rates of inflation and deflation are measured using a consumer prices index (CPI) over a period
of time.
The table shows average rates of CPI for Japan from 2010–2014.
year change in CPI
2010 –0.72
2011 –0.28
2012 –0.03
2013 0.36
2014 2.75
In which period did Japan experience deflation followed by inflation?
A 2010–2011 B 2011–2012 C 2012–2013 D 2013–2014
24 What is a typical characteristic of a developing country?
A equal distribution of income and wealth

B good medical care
C high gross domestic product per head
D high reliance on natural resources

10
25 In Botswana, better healthcare has meant that birth rates have been falling faster than death
rates. Also the number of children born, on average, to each woman has declined from 6.4 to 3.2.
A Government spending on education will need to increase.

B Medical improvements have resulted in falling infant mortality rates.
C There will be a decline in income for each person working.
D There will, in the long run, be an increase in the working population.
26 The table shows the percentage share of GDP held by the richest 20% and poorest 20% of the
population in each country.
Which country had the greatest extremes of income and poverty?
country richest 20% poorest 20%
A Ghana 41.7% 8.4%

B Nigeria 55.7% 4.4%
C Senegal 48.2% 6.4%
D South Africa 64.8% 2.9%
27 What would cause a favourable change in the Kenyan trade in services (invisible) account?
A A Kenyan company wins a contract to transport exports from Uganda.

B A Kenyan tea company increases its exports.
C A Kenyan trade delegation promoting coffee sales visits India.
D A Zambian company increases its exports to Kenya.
28 Protectionist policies reduce the level of global economic growth.
What is a possible reason for this?
A Incomes earned from trading decline.

B Tariffs encourage trade.
C The average cost of production decreases.
D The production possibility of an economy expands.
© UCLES 2019 0455/11/O/N/19

11
29 question removed
30 What would reduce the volume of international trade in the world economy?
A a German bank making a loan to a Nigerian company

B a Japanese car manufacturer establishing a factory in the Czech Republic
C the Canadian government introducing quotas on Malaysian electronics products
D the Swedish government granting aid to Somalia
© UCLES 2019 0455/11/O/N/19

ECONOMICS 0455/12
45 minutes
Soft clean eraser
*1386378865*

IB19 11_0455_12/2RP
2
1 Which statement about factors of production is correct?
A Capital is the amount of money borrowed from a bank.

B Labour is output made by an employee.
C Land includes commercially grown rice crops.
D Profit is the reward for enterprise.
2 The diagram shows two production possibility curves.
output of 100
capital goods
X Y
50
0
0 50 80 90
output of
consumer goods
Which statement about the movement from point X to point Y is correct?
A Demand for consumer goods has risen.

B The opportunity cost for producing consumer goods has risen.
C There has been an increase in productivity in consumer goods production.
D There has been an inward shift in the production possibility curve.
© UCLES 2019 0455/12/O/N/19

3



5 What suggests that there is market failure?
A high producer profits

B high retail prices
C lack of competition
D low levels of investment
6 What can cause the supply curve for a product to shift to the right?
A an increase in demand for the product

B an increase in government subsidies to producers
C an increase in indirect taxes on the product
D an increase in the costs of production

4
7 A railway company increases ticket prices by 10% for travel between 06:00 and 09:00, causing a
reduction in demand by 2%. After 09:00 it reduces ticket prices by 5%, resulting in a 7% increase
in demand.
What is the price elasticity of demand in response to these price changes?
between 06:00
after 09:00
and 09:00
A elastic elastic
B elastic inelastic
C inelastic elastic
D inelastic inelastic
8 What is a disadvantage of being a specialist skilled worker?
A Career opportunities are abundant.

B Earnings are related to the level of skill.
C It may be difficult to find work locally.
D Labour supply is elastic and plentiful.
9 What is not normally a function of the central bank of a country?
A acting as lender of last resort

B issuing notes and coins
C operating the government’s monetary policy
D setting the government’s budget
© UCLES 2019 0455/12/O/N/19

5

income?
A X → Y→ Z
B Y→Z→X
C Z→X→Y
D Z→Y→X
German orchestra?


12 Which type of business organisation is necessarily in the public sector of the economy?
A multinational company
B public limited company
C public corporation
D sole trader

6
13 Which combination of characteristics correctly describes a monopoly?
barriers to entry economies of scale
A high possible
B high impossible
C low possible
D low impossible

month
April 300 290

May 400 350
June 550 270
July 570 490
August 620 590
A May
B June
C July
D August
© UCLES 2019 0455/12/O/N/19

7

output
($) ($)
10 300 800
20 300 1500
30 300 3300
16 Why are indirect taxes, such as VAT of 20% on goods and services, described as regressive
when comparing high-income and low-income purchasers?
A High-income purchasers pay a higher percentage of their income in tax.

B High-income purchasers pay a lower percentage of their income in tax.
C Low-income purchasers pay a lower percentage of their income in tax.
D Low-income purchasers and high-income purchasers pay the same percentage of their
income in tax.
17 The government has an important role in mixed economies.
Which function would it not perform?
A distributing dividends from profits of state-owned enterprises

B employing workers to collect taxes
C investing in transport infrastructure projects
D producing goods in public corporations
18 Which combination of policy measures would be effective in reducing the effects of a recession?
A a reduction in interest rates and a reduction in income tax

B a reduction in interest rates and an increase in income tax
C an increase in interest rates and a reduction in income tax
D an increase in interest rates and an increase in income tax

8
19 How would government spending on education be classified?
fiscal monetary supply-side

policy policy policy
A no no yes
B no yes no
C yes no yes
D yes yes no
20 Which increase is most likely to cause a rise in the output of an economy?
A hyperinflation
B income taxes
C interest rates
D investment
21 Why was the Human Development Index (HDI) introduced as a measure of the standard of
living?
A Education and healthcare are important contributors to the standard of living.

B GDP per head only measures development.
C Inequality can only be measured by HDI.
D Literacy rates are not an effective measure of the standard of living.
22 During periods of high unemployment across the entire labour force, the highest unemployment
rate in an economy is often in the 16–19 year-old age group.
Which statement explains why 16–19 year-olds may find it difficult to find a job?
A The incentive to earn an income is lower for that age group.

B Their wages are lower than those of adults.
C They lack both work experience and the necessary skills.
D They prefer leisure activities to long working hours.
© UCLES 2019 0455/12/O/N/19

9
23 Venezuela, a leading world oil producer, has experienced hyperinflation of over 400% per annum
in recent years.
How does hyperinflation affect an economy?
prices effect
A fluctuate up and down consumers are uncertain about future price levels
B fluctuate up and down consumers can anticipate future price levels
C rise very rapidly value of fixed assets remains stable
D rise very rapidly money has limited worth as a medium of exchange
24 What is most likely to increase as a country becomes more developed?
A average household income

B average size of family
C infant mortality rate
D the proportion of income spent on food

A Ghana 41.7% 8.4%


10

28 What is a disadvantage of trade protection of manufactured goods?
A It can lead to retaliation from trading partners.

B It encourages infant industries to grow.
C It increases demand for domestic manufactured goods.
D It reduces outflows of currencies to pay for imports.
29 What would cause a rise in the deficit on the current account of the balance of payments?
A a fall in foreign direct investment into the country

B a fall in interest earned on overseas investment by the country
C a fall in the value of imported manufactured goods into the country
D a rise in the revenue earned from tourism in the country

© UCLES 2019 0455/12/O/N/19

ECONOMICS 0455/13
45 minutes
Soft clean eraser
*2323848193*

IB19 11_0455_13/4RP
2
1 What identifies a finite resource?
A The resource does not renew itself.

B The supply of the resource is greater than demand.
C There is no opportunity cost for the resource.
D There is unlimited supply of the resource.
2 Country X provides computers to help teachers in the classroom.
How would this technology increase the economic potential of country X?
A It improves the quality of human resources.

B It reduces the amount of land required for education.
C It removes the need for teachers.
D It requires more teachers to do the same work.



© UCLES 2019 0455/13/O/N/19

3
5 In a private market system certain goods and services would not be available unless the
government intervened.
What does this identify in a private market?
A market distribution
B market equilibrium
C market failure
D market structure
6 There has been a movement upwards along the supply curve of a product.
What is the most likely explanation for this?
A Consumer incomes have fallen.

B New technology has made the product cheaper to produce.
C The government has imposed a tax on the product.
D The price of a substitute has increased.
7 Price elasticity of demand (PED) measures the responsiveness of demand to a change in price. It
can differ for different goods.
For which good is the PED most elastic according to the table?
percentage change percentage

good
in quantity demanded change in price
A butter 6.0 5.0

B cars 5.5 5.0
C furniture 5.0 5.0
D petrol 3.0 5.0
8 What is most likely to increase the occupational mobility of labour?
A building more houses

B increased spending on re-training schemes
C increased total government spending
D increasing the information on job availability

4
9 Which organisations can directly fund the growth of firms?
central commercial
government
bank banks
A no yes no
B no yes yes
C yes no no
D yes no yes

income?
A X → Y→ Z
B Y→Z→X
C Z→X→Y
D Z→Y→X
German orchestra?


© UCLES 2019 0455/13/O/N/19

5
12 A public limited company has shares which are
A freely transferable on the stock exchange.

B owned by the government.
C owned only by its workers.
D restricted in their transferability.
13 In 2015, a large UK company attempted to acquire a rival US medical company to become the
world’s leading supplier. Both companies specialised in the manufacture of medicines for treating
rare diseases.
Which term would describe the acquisition if it had been successful?
A backwards vertical integration

B conglomerate integration
C forwards vertical integration

month
April 300 290

May 400 350
June 550 270
July 570 490
August 620 590
A May
B June
C July
D August

6

output
($) ($)
10 300 800
20 300 1500
30 300 3300
16 A government decides to increase tax revenues from consumer expenditure.
Which tax will it increase?
A capital gains tax

B death duties
C profits tax
D value added tax
17 A government uses a mixture of fiscal policy measures and supply-side policy measures to
stimulate growth in the economy.
Which combination of policy measures will achieve this?
fiscal policy measures supply-side policy measures
A increase government expenditure increase skills training

B increase government investment increase indirect taxes
C increase direct taxation decrease unemployment benefit
D increase interest rates decrease money supply
© UCLES 2019 0455/13/O/N/19

7
18 The table shows tax paid at different income levels in an economy.
income level tax paid

($) ($)
5 000 500
12 000 2400
20 000 5000
30 000 6000
Which description of the tax system used is correct?
A continually progressive
B progressive then regressive
C proportional
D regressive then progressive
19 The government uses monetary policy and reduces the interest rate.
What might be a consequence of this?
A a decrease in the rate of inflation

B an increase in the level of investment
C an increase in the level of savings
20 What is the most likely result of a sustained increase in Gross Domestic Product (GDP)?
A a decrease in living standards

B a decrease in the budget surplus
C an increase in tax revenues
21 Which indicator would be included in the Human Development Index (HDI) for a country?
A adult literacy rate

B doctors per 1000 people
C unemployment rate
D years spent in education

8
22 Which type of unemployment is the result of a permanent fall in the demand for the products of
an industry?
A cyclical
B frictional
C seasonal
D structural
23 The graph shows the rate of inflation in a country between 2000 and 2014.
8
inflation rate 7
% 6
5
4
3
2
1
0
2000 2010 2014
year
What can be concluded about average prices?
A They fell throughout the period.

B They peaked in 2000.
C They rose each year.
D They were lower in 2014 than they were in 2010.
24 Which change, as a percentage of GDP, would be unlikely to be found in a country as it

develops?
A an increase in average incomes and a decrease in unemployment

B an increase in manufacturing production and an increase in shipping services
C an increase in subsistence farming and a decrease in financial services
D an increase in tourism and a decrease in the export of agricultural products
© UCLES 2019 0455/13/O/N/19

9

A Ghana 41.7% 8.4%


28 A newspaper headline stated ‘Free trade helps the world’s poorest’.
Why might this be correct?
A Employment will be focused in hi-tech industries.

B Environmental disasters will be avoided.
C Free trade reduces competitiveness for domestic firms.
D The cost of living is likely to go down with free trade.

10
29 A trade union succeeds in raising the wages in an industry above the current equilibrium wage.
How would the demand and supply of labour change?
change in quantity change in quantity

of labour demanded of labour supplied
A fall fall
B fall rise
C rise fall
D rise rise

© UCLES 2019 0455/13/O/N/19

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Cambridge IGCSE™

You must answer on the multiple choice answer sheet.

You will need: Multiple choice answer sheet

This document has 12 pages. Blank pages are indicated.

1 What is an example of the purchase of a consumer good?

A A farm owner buys a television.

2 What is the function of the factors of production in an economy?

A to make goods and services to fulfil wants and needs

How would this be represented on this diagram?

© UCLES 2020 0455/11/M/J/20

4 Which topic is included in microeconomics?

5 What aspect of demerit goods means they are overproduced?

A clear product information

6 The diagram shows market demand and supply curves.

To what extent is the market in disequilibrium at price P3?

A OQ1 – OQ2 B OQ1 – OQ3 C OQ2 – OQ4 D OQ3 – OQ5

What is the price elasticity of supply (PES) for lithium?

A 0.33 B 0.66 C 1.50 D 2.0

© UCLES 2020 0455/11/M/J/20 [Turn over

8 The wage of labour in a firm increases.

What is the most likely effect on the production process?

A Capital replaces labour immediately.

9 Which combination of influences would increase the level of borrowing by a household?

A becoming pensioners higher rate of inflation

Which statement is shown by the graph to be true?

A Younger women earn more than older women.

© UCLES 2020 0455/11/M/J/20

11 People’s income decreases.

How is the proportion spent on food and leisure likely to change?

At which level of output is average total cost lowest?

A 100 1200 1200

13 The following information refers to a firm producing shoes.

At which level of output does the firm maximise profits?

total output of total cost total revenue

A 100 1000 1300

© UCLES 2020 0455/11/M/J/20 [Turn over

14 What is most likely to lead to an improvement in labour productivity in an industry?

A an increase in capital investment

15 How is a government most likely to prevent the growth of monopolies?

A by encouraging mergers in the private sector

16 What is not included in public expenditure?

A capital spending by firms

17 When is the budget described as balanced?

A when direct taxes and indirect taxes are equal

18 The government wishes to increase economic growth in its economy.

What would not be likely to achieve this aim?

A The central bank encourages bank lending.

© UCLES 2020 0455/11/M/J/20

19 The government redistributes income more evenly.

What is most likely to increase?

A the incentive to work

total labour force 30 30

21 What may directly cause economic growth?

22 What would not be required in the construction of an index of consumer prices?

A the selection of a base year

© UCLES 2020 0455/11/M/J/20 [Turn over

rate of rate of rate of

country W 1.4 3.4 10.2