Economics

1. 1.

   In a fictional economy, a qualified electrician can do the same electrical work in another town but cannot afford the moving costs and higher local rent. A second worker lives beside a laboratory with vacancies but lacks the technical qualification needed for its jobs. Identify the kind of labour immobility most directly illustrated by each case. Propose one matched measure for each barrier and explain why offering the first worker a laboratory qualification, or paying the second worker's moving costs, would not directly solve the stated problem. Assume both workers want the available work.

   [4 marks] · no calculator

   Syllabus placement evidence: Cambridge IGCSE Economics 0455, 2026 syllabus version 2, 1.2.2 mobility of the factors of production, printed p.12; 2.10.2 factor immobility, printed p.16.. Applies prescribed influences on factor mobility and the stated immobility cause of market failure. The broad topic uses decision-makers as its primary area, with basic-problem explicitly related for this task.

   Worked explanation

   1. Ask separately whether the worker needs to move location or acquire a different occupational capability. A vacancy can coexist with unemployment when the required match is blocked.
   2. Match each measure to the named constraint instead of treating any training or mobility subsidy as universally suitable. Successful qualification, affordable housing and continued vacancies remain implementation conditions rather than guaranteed outcomes.

   Common mistake: Living close to a vacancy does not remove an occupational skills barrier.

   Marking points

   • Identifies the electrician's barrier as geographical immobility: suitable skills can be used elsewhere but relocation is costly.
   • Identifies the nearby worker's barrier as occupational immobility: the missing qualification limits movement into that occupation.
   • Explains how relocation or housing support could address the electrician's actual cost barrier; unrelated training alone would not pay those costs.
   • Explains how relevant training leading to the required qualification could address the laboratory skills barrier; moving support alone would not supply the missing skill.

   Examiner tip: Living close to a vacancy does not remove an occupational skills barrier.

2. 2.

   A fictional textile firm owns a specialised loom that can be transported to another town by lorry, but it cannot make bottled drinks without being replaced. Separately, a particular field cannot be moved to another district, but it can switch between wheat and grazing with suitable preparation. Define geographical and occupational mobility, then use the loom and the field to explain why ability to change location and ability to change productive use are different. Identify one practical influence on each proposed move or change of use. Treat the field itself as land and the produced loom as capital.

   [6 marks] · no calculator

   Syllabus placement evidence: Cambridge IGCSE Economics 0455, 2026 syllabus version 2, 1.2.1-1.2.2, printed p.12: factors and influences on their mobility.. Extends the labour case to prescribed land and capital mobility without claiming all resources can change every use. This is basic-problem content explicitly related within the broad decision-makers topic.

   Worked explanation

   1. Classify mobility along two separate dimensions. A resource's physical movement does not make it usable for every purpose, and an immovable resource can still have alternative uses.
   2. The loom's lorry journey changes its location, not its technical design. The field stays in place when wheat is replaced by grazing. Feasible transport and preparation costs determine whether these possibilities are economically practical.

   Common mistake: Do not infer occupational mobility simply because a machine can be transported, or infer no alternative uses because land cannot move.

   Marking points

   • Defines geographical mobility as ability to move between locations.
   • Defines occupational mobility as ability to move between productive uses or activities.
   • Explains that the loom can be geographically mobile while remaining specialised and occupationally immobile with respect to the proposed drinks production.
   • Explains that the field is geographically immobile but can have occupational mobility between the stated agricultural uses.
   • Identifies a relevant influence on relocating the loom, such as transport cost, size, route access or installation requirements.
   • Identifies a relevant influence on the field's change of use, such as soil suitability, preparation cost, water availability or permission; physical immobility does not mean every use is fixed.

   Examiner tip: Do not infer occupational mobility simply because a machine can be transported, or infer no alternative uses because land cannot move.

3. 3.

   In an original classroom example, a household has $1000 in its commercial-bank account. Its employer pays $400 into that account, then the household instructs the bank to transfer $250 to an electricity supplier. There are no fees, interest or other transactions. Calculate the closing balance. Identify and explain two distinct commercial-bank services illustrated here, and one benefit of the payment service to the household. This is a fictional record, not an instruction to open, access or operate an account; no bank safety guarantee is assumed.

   [4 marks]

   Syllabus placement evidence: Cambridge IGCSE Economics 0455, 2026 syllabus version 2, 3.1.2 banking, printed p.17: commercial-bank roles and importance for consumers.. Practises the prescribed consumer-facing banking role through deposits and payments. Invented arithmetic is self-contained and does not provide real financial advice or account permissions.

   Worked explanation

   1. Treat the account balance as a stock changed by each recorded receipt and payment: 1400 before the bill and 1150 afterwards.
   2. Separate the deposit service from the payment service. The bank records funds and executes the customer's instruction; these functions facilitate household transactions but do not establish that the bank guarantees every loss or that this account earns interest.

   Common mistake: Depositing wages and borrowing from a bank are different transactions; no loan is described here.

   Marking points

   • Calculates the closing deposit balance as $1000+$400-$250=$1150.
   • Identifies accepting and recording deposits: the wage receipt increases the household's account balance.
   • Identifies executing customer payments: the bank transfers the instructed amount to the supplier and reduces the household's balance.
   • Explains a household benefit such as paying the supplier without physically carrying cash and obtaining a transaction record; interest payment or risk-free protection is not established.

   Examiner tip: Depositing wages and borrowing from a bank are different transactions; no loan is described here.

4. 4.

   For an original educational model, a fictional producer starts Monday with $900 cash and must pay $1200 for inputs that day. A customer is scheduled to pay $1600 on Friday. A commercial bank has already agreed to provide exactly the Monday shortfall as short-term credit, with principal repaid on Friday. Ignore interest and fees solely for this calculation, assume the customer pays as scheduled and assume no other flows. Calculate the credit required and Friday cash after principal repayment. Explain how the bank's lending role allows production before customer payment, and one reason the lender would check the receipt forecast. Do not recommend a real loan or assume these terms are available in practice.

   [4 marks]

   Syllabus placement evidence: Cambridge IGCSE Economics 0455, 2026 syllabus version 2, 3.1.2 banking, printed p.17: commercial-bank roles and importance for producers.. Uses a supplied agreement to explain producer credit and transaction timing, not to advise borrowing or require advanced bank balance-sheet or money-multiplier theory.

   Worked explanation

   1. The input bill exceeds available cash by $300. With the agreed credit, the producer can pay $1200 on Monday and holds zero cash immediately afterwards.
   2. Friday's $1600 receipt less $300 principal repayment leaves $1300. This illustrates a commercial bank's lending service for producers, not a finding that borrowing is always desirable; the deliberately omitted interest, fees and uncertainty would matter in a real agreement.

   Common mistake: Do not count the $300 loan as sales revenue or omit its repayment when calculating closing cash.

   Marking points

   • Calculates Monday's shortfall and agreed credit as $1200-$900=$300.
   • Calculates Friday cash after the input payment and later receipt/repayment as $900+$300-$1200+$1600-$300=$1300.
   • Explains that bank credit provides temporary purchasing power when inputs must be paid for before sales receipts arrive, enabling production despite the timing gap.
   • Explains that late or lower customer receipts could prevent timely repayment, so the bank checks cash timing and creditworthiness rather than treating a forecast as a guarantee.

   Examiner tip: Do not count the $300 loan as sales revenue or omit its repayment when calculating closing cash.

5. 5.

   In a fictional economy, the Treasury holds an account at a commercial bank and instructs it to pay government employees' salaries into their personal bank accounts. The separate central bank sets the policy interest rate and provides settlement accounts for commercial banks. A learner claims that handling government salaries makes the first bank the central bank. Explain why that claim is incorrect. Identify the commercial-bank service used by government, one benefit for the employee receiving a salary, and one different role performed by the central bank. No real government or bank account is involved.

   [4 marks] · no calculator

   Syllabus placement evidence: Cambridge IGCSE Economics 0455, 2026 syllabus version 2, 3.1.2 banking, printed p.17: central and commercial banks for government, producers and consumers.. Completes the user-perspective set with government and contrasts bank roles. The institutional arrangement is expressly hypothetical; no account operation, legal permission or claim about every jurisdiction is inferred.

   Worked explanation

   1. Classify the institution by its functions and position in the banking system, not simply the identity of one customer. A commercial bank can supply services to households, firms and the public sector.
   2. Here, the Treasury uses ordinary account/payment services while employees receive deposit payments. The central bank's policy-rate or interbank-settlement responsibility is different. This example does not claim every country's Treasury uses the same institutional arrangement.

   Common mistake: A bank's government customer is not sufficient evidence that the institution is the central bank.

   Marking points

   • Explains that serving a government customer does not itself turn a commercial bank into the central bank; the institutions have different roles in this stipulated system.
   • Identifies account and payment services for government: recording its funds and executing authorised salary transfers.
   • Explains an employee benefit, such as salary funds becoming available in a personal account for subsequent payments without collecting physical cash.
   • Identifies a distinct stated central-bank role, either setting the policy interest rate or providing settlement accounts for commercial banks, and distinguishes it from executing a customer's payroll instruction.

   Examiner tip: A bank's government customer is not sufficient evidence that the institution is the central bank.

Original, unofficial practice questions from SubjectScout — not official past-paper questions or complete syllabus coverage. Added English teaching explanations are AI-authored; independent teacher review is pending.