---
title: "Cambridge IGCSE Economics 0455 Syllabus Reference"
course: "Cambridge IGCSE Economics"
syllabus_code: "0455"
exam_years: "2027-2029"
document_type: "syllabus_reference"
source_file: "IGCSE Economics Syllabus (2027-2029).pdf"
source_version: "Version 1, September 2024"
updated_on: "2026-05-06"
---

# Cambridge IGCSE Economics 0455

**Syllabus Reference: 2027-2029**

This document is a classroom planning reference based on the Cambridge IGCSE Economics 0455 syllabus for exams in 2027, 2028 and 2029. It is paraphrased for lesson planning and deck creation; use the official PDF as the final authority for exam entries, assessment rules and exact syllabus wording.

## Course Aims

Students should develop secure economic terminology, concepts and theories; use economic analysis with written, numerical, diagrammatic and graphical information; analyse economic problems logically; evaluate uncertain outcomes; and consider policy issues including population change, globalisation and environmental sustainability.

## Assessment Overview

| Paper | Duration | Marks | Weighting | Format |
| --- | --- | ---: | ---: | --- |
| Paper 1 | 1 hour | 40 | 30% | 40 compulsory multiple-choice questions. |
| Paper 2 | 2 hours | 80 | 70% | Section A: one compulsory data-response question worth 20 marks. Section B: answer three questions from four, each worth 20 marks. |

Calculators are allowed in both papers. Both papers can assess all subject content.

## Assessment Objectives

| AO | Focus | Qualification weighting |
| --- | --- | ---: |
| AO1 | Knowledge and understanding of definitions, formulas, concepts, theories and terminology. | 43% |
| AO2 | Select, organise, interpret and apply analysis to data, diagrams and economic issues. | 47% |
| AO3 | Evaluate information, data and arguments, recognising uncertainty in economic decisions. | 10% |

## Command Words

| Command | Expected response |
| --- | --- |
| Analyse | Examine in detail, showing elements and relationships. |
| Calculate | Work out from given information. |
| Define | Give a precise meaning. |
| Describe | Give characteristics, features or points. |
| Discuss | Write about an issue in depth and with structure. |
| Explain | Give reasons, purposes or clear relationships, supported by evidence. |
| Give | Produce an answer from a source or memory. |
| Identify | Name, select or recognise. |
| State | Express clearly. |

## Content Overview

1. The basic economic problem
2. The allocation of resources
3. Microeconomic decision-makers
4. Government and the macroeconomy
5. Economic development
6. International trade and globalisation

## 1 The Basic Economic Problem

| Ref | Syllabus focus | Planning notes / exam-ready wording |
| --- | --- | --- |
| 1.1.1 | Finite resources and infinite wants | The basic economic problem is that finite resources cannot satisfy infinite wants, creating scarcity. Apply to consumers, workers, firms and governments. |
| 1.1.2 | Resource allocation decisions | The three basic economic questions are what to produce, how to produce and who to produce for. |
| 1.1.3 | Economic goods and free goods | Economic goods are scarce, use resources and have opportunity cost. Free goods are available without using scarce resources and have no opportunity cost. |
| 1.2.1 | Factors of production and rewards | Land earns rent, labour earns wages, capital earns interest and enterprise earns profit. |
| 1.2.2 | Quantity and quality of factors | Quantity can change through resource discovery, population/labour-force change, investment and entrepreneurship. Quality can change through education, training, healthcare, technology and productivity improvements. |
| 1.3.1 | Opportunity cost | Opportunity cost is the next best alternative forgone. Use consumer, worker, firm and government examples. |
| 1.3.2 | Opportunity cost and decisions | Choice means sacrificing alternatives when allocating limited money, time, resources or tax revenue. |
| 1.4.1 | PPC diagrams | A PPC shows the maximum combinations of two outputs an economy can produce with available resources and technology. Students need to draw and interpret PPC diagrams. |
| 1.4.2 | Points under, on and beyond a PPC | Under the PPC shows unemployed or inefficiently used resources. On the PPC shows productive efficiency. Beyond the PPC is currently unattainable. |
| 1.4.3 | Movements along a PPC | A movement along the PPC shows a change in output mix and the opportunity cost of producing more of one good. |
| 1.4.4 | Shifts of a PPC | A rightward shift shows economic growth or higher productive capacity. A leftward shift shows reduced capacity. |

## 2 The Allocation of Resources

| Ref | Syllabus focus | Planning notes / exam-ready wording |
| --- | --- | --- |
| 2.1.1 | How markets work | A market brings buyers and sellers together. Buyers demand products; sellers supply them. |
| 2.2.1 | Individual and market demand | Demand is willingness and ability to buy at a given price over a period. Market demand combines individual demand. Students need demand diagrams. |
| 2.2.2 | Movements along demand | Extensions and contractions are caused by a change in the product's own price. |
| 2.2.3 | Shifts of demand | Demand shifts when conditions of demand change, such as income, tastes, population, advertising, substitute prices or complement prices. |
| 2.3.1 | Individual and market supply | Supply is willingness and ability to sell at a given price over a period. Market supply combines firms' supply. Students need supply diagrams. |
| 2.3.2 | Movements along supply | Extensions and contractions are caused by a change in the product's own price. |
| 2.3.3 | Shifts of supply | Supply shifts when conditions of supply change, such as costs, technology, productivity, taxes, subsidies, regulations, firms or weather. |
| 2.4.1 | Price mechanism | Price changes allocate resources by signalling what, how and for whom to produce. |
| 2.4.2 | Market equilibrium | Equilibrium is where demand equals supply. Students need schedules and demand/supply diagrams. |
| 2.4.3 | Market disequilibrium | Disequilibrium creates shortages when demand exceeds supply and surpluses when supply exceeds demand. |
| 2.5.1 | Causes of price changes | Market prices change when demand and/or supply changes. |
| 2.5.2 | Consequences of price changes | Price changes affect sales and can be shown using demand and supply diagrams. |
| 2.6.1 | PED definition | Price elasticity of demand is the responsiveness of quantity demanded to a change in price. |
| 2.6.2 | PED calculation and values | PED = percentage change in quantity demanded / percentage change in price. Values include perfectly inelastic, inelastic, unitary elastic, elastic and perfectly elastic. |
| 2.6.3 | Determinants of PED | Key influences include substitutes, necessity/luxury status, proportion of income, habit, time and whether purchase can be delayed. |
| 2.6.4 | PED, expenditure and revenue | If demand is elastic, lower price can raise revenue; if inelastic, higher price can raise revenue. Students need diagrams and calculations. |
| 2.6.5 | Significance of PED | Apply PED to decisions by consumers, workers, firms and governments. |
| 2.7.1 | PES definition | Price elasticity of supply is the responsiveness of quantity supplied to a change in price. |
| 2.7.2 | PES calculation and values | PES = percentage change in quantity supplied / percentage change in price. Values include perfectly inelastic, inelastic, unitary elastic, elastic and perfectly elastic. |
| 2.7.3 | Determinants of PES | Key influences include production time, spare capacity, stocks, factor mobility, resource availability and whether production can be switched. |
| 2.8.1 | Market economic system | Resources are allocated mainly through markets, private ownership and the price mechanism. |
| 2.8.2 | Arguments for and against markets | Advantages include choice, incentives and efficiency. Disadvantages include inequality, market failure and under-provision of some goods. |
| 2.9.1 | Market failure | Market failure is an inefficient allocation of resources by the market. |
| 2.9.2 | Market failure terms | Include public goods, merit goods, demerit goods, private/external/social benefits, private/external/social costs and monopoly. |
| 2.9.3 | Causes of market failure | Causes include public goods, merit and demerit goods, external costs and benefits, and abuse of monopoly power. |
| 2.9.4 | Consequences of market failure | Include over-consumption of demerit goods, under-consumption of merit goods, non-provision of public goods and restricted monopoly supply with higher prices. Market-failure demand/supply diagrams are not required. |
| 2.10.1 | Mixed economic system | A mixed economy combines private-sector market activity with public-sector intervention and provision. |
| 2.10.2 | Arguments for and against mixed economies | Advantages include correcting market failure and supporting equity. Disadvantages include possible inefficiency, cost and weaker incentives. |
| 2.10.3 | Government intervention | Students need definitions, diagrams, advantages and disadvantages for maximum prices, minimum prices, indirect taxes and subsidies. They also need definitions, advantages and disadvantages for regulation, privatisation, nationalisation, direct provision and quotas. |

## 3 Microeconomic Decision-Makers

| Ref | Syllabus focus | Planning notes / exam-ready wording |
| --- | --- | --- |
| 3.1.1 | Money | Cover forms, functions and characteristics. Functions include medium of exchange, unit of account, store of value and standard of deferred payment. |
| 3.1.2 | Banking | Central banks support government and the banking system, issue currency and help implement monetary policy. Commercial banks accept deposits, lend and provide payment services. |
| 3.2.1 | Household spending, saving and borrowing | Influences include income, interest rates, confidence, age and culture. |
| 3.3.1 | Choice of occupation | Wage and non-wage factors affect job choice, including pay, conditions, security, promotion and job satisfaction. |
| 3.3.2 | Wage determination | Wages are affected by demand and supply of labour, trade unions, bargaining power and government policy including national minimum wage. Students need labour-market and minimum-wage diagrams. |
| 3.3.3 | Wage differences | Explain using demand/supply, bargaining strength, discrimination, government policy, skill level, sector and private/public sector employment. |
| 3.3.4 | Mobility of labour | Occupational mobility is movement between jobs. Geographical mobility is movement between places. Explain causes and consequences of changes in mobility. |
| 3.3.5 | Division of labour | Worker specialisation can raise output and productivity but may cause boredom, dependence and loss of flexibility. |
| 3.4.1 | Types of firms | Cover primary, secondary and tertiary firms; private and public sector firms; advantages and disadvantages of small and large firms. |
| 3.4.2 | Mergers | Horizontal, vertical and conglomerate mergers; definitions, examples, advantages and disadvantages. |
| 3.4.3 | Economies and diseconomies of scale | Internal/external economies lower average total cost as scale rises; diseconomies raise average cost. Students need ATC diagrams. |
| 3.5.1 | Demand for factors of production | Influences include demand for the product, factor prices, factor availability and factor productivity. |
| 3.5.2 | Labour- and capital-intensive production | Explain reasons for each method plus advantages and disadvantages. |
| 3.5.3 | Production and productivity | Production is total output. Productivity is output per input. Explain influences and effects of investment on productivity. |
| 3.6.1 | Costs of production | Define TC, ATC, FC, AFC, VC and AVC. |
| 3.6.2 | Cost calculations | Calculate TC, ATC, FC, AFC, VC and AVC, and interpret cost diagrams as output changes. |
| 3.6.3 | Revenue | Total revenue is price x quantity sold. Average revenue is revenue per unit sold. |
| 3.6.4 | Revenue calculations | Calculate TR and AR and explain how sales influence revenue. |
| 3.6.5 | Objectives of firms | Objectives include survival, social welfare, profit maximisation and growth. |
| 3.7.1 | Competitive markets | Cover characteristics, advantages and disadvantages. A high number of firms can affect price, quality, choice and profit. Perfect/imperfect competition theory and diagrams are not required. |
| 3.7.2 | Monopoly markets | Cover characteristics, advantages and disadvantages. One firm can affect price, quality, choice and profit. Diagrams are not required. |

## 4 Government and the Macroeconomy

| Ref | Syllabus focus | Planning notes / exam-ready wording |
| --- | --- | --- |
| 4.1.1 | Macroeconomic aims | Aims include economic growth, full employment/low unemployment, stable prices/low inflation, balance of payments stability, redistribution of income and environmental sustainability. Conflicts include employment vs inflation, growth vs sustainability, and employment vs balance of payments stability. |
| 4.2.1 | Government budget | A government budget is a plan for revenue and expenditure. A deficit occurs when spending exceeds revenue; a surplus occurs when revenue exceeds spending. Students calculate deficit/surplus size. |
| 4.2.2 | Government spending | Main areas include education, healthcare, infrastructure, welfare, defence and debt interest. Explain reasons and effects. |
| 4.2.3 | Taxation | Reasons include raising revenue, discouraging demerit goods, reducing imports, redistributing income, influencing total demand and encouraging environmental sustainability. Cover progressive, regressive, proportional, direct and indirect taxes. |
| 4.2.4 | Fiscal policy | Fiscal policy uses government spending and taxation to influence economic activity and macroeconomic aims. |
| 4.2.5 | Fiscal policy measures | Measures are changes in taxes and government spending. |
| 4.2.6 | Effects of fiscal policy | Explain how fiscal policy may support growth, employment, price stability, redistribution, balance of payments stability and sustainability. |
| 4.3.1 | Money supply and monetary policy | Money supply is the amount of money in the economy. Monetary policy uses interest rates, money supply and exchange-rate measures to influence macroeconomic aims. |
| 4.3.2 | Monetary policy measures | Measures include changes in interest rates, money supply and foreign exchange rate. |
| 4.3.3 | Effects of monetary policy | Explain transmission to spending, saving, borrowing, investment, output, employment, inflation and the current account. |
| 4.4.1 | Supply-side policy | Supply-side policy aims to increase productive capacity, efficiency and long-run output. |
| 4.4.2 | Supply-side measures | Measures include education and training, infrastructure spending, labour-market reform, lower direct taxes, deregulation, incentives to work and invest, and privatisation. |
| 4.4.3 | Effects of supply-side policy | Explain how supply-side policies can support growth, employment, price stability, competitiveness and balance of payments stability. |
| 4.5.1 | Economic growth | Economic growth is an increase in real GDP. |
| 4.5.2 | Measuring growth | Use real GDP to measure economic growth. |
| 4.5.3 | Causes and consequences of growth | Growth may come from higher total demand, more resources or better-quality resources. Analyse advantages and disadvantages. |
| 4.5.4 | Recession | A recession is a fall in real GDP or negative economic growth. It may be caused by lower demand, fewer resources or lower-quality resources, and affects consumers, workers, firms and government. |
| 4.5.5 | Policies for growth | Evaluate the range of policies available to promote economic growth. |
| 4.6.1 | Employment, unemployment and full employment | Employment is being in work. Unemployment is being willing and able to work but unable to find a job. Full employment means unemployment is low and most willing workers can find work. |
| 4.6.2 | Measuring unemployment | Use the labour force survey and unemployment rate formula: unemployed / labour force x 100. |
| 4.6.3 | Types of unemployment | Frictional, structural, cyclical and seasonal unemployment. |
| 4.6.4 | Consequences of unemployment | Analyse effects on individuals, firms, government and the economy. |
| 4.6.5 | Policies to reduce unemployment | Evaluate policies such as demand-side stimulus, training, labour mobility policies and supply-side reforms. |
| 4.7.1 | Inflation and deflation | Inflation is a sustained rise in the general price level. Deflation is a sustained fall in the general price level. |
| 4.7.2 | Measuring inflation | Inflation is measured using the Consumer Prices Index (CPI). |
| 4.7.3 | Causes of inflation | Demand-pull inflation comes from rising total demand. Cost-push inflation comes from rising costs of production. |
| 4.7.4 | Consequences of inflation | Analyse effects on savers, lenders, borrowers, consumers, workers, firms and the economy. |
| 4.7.5 | Policies to control inflation | Evaluate fiscal, monetary and supply-side policies for controlling inflation. |

## 5 Economic Development

| Ref | Syllabus focus | Planning notes / exam-ready wording |
| --- | --- | --- |
| 5.1.1 | Indicators of living standards | Indicators include real GDP per head and HDI. HDI includes income, education and health/life expectancy. Evaluate strengths and weaknesses. |
| 5.1.2 | Comparing living standards and income distribution | Explain why living standards and income distribution differ within and between countries. |
| 5.2.1 | Absolute and relative poverty | Absolute poverty means income is too low to afford basic needs. Relative poverty means low income compared with others in the same society. |
| 5.2.2 | Causes of poverty | Causes include unemployment, low wages, illness, age and environmental factors. |
| 5.2.3 | Policies to alleviate poverty and redistribute income | Policies include growth, education, healthcare provision, state benefits, progressive taxation and national minimum wage. |
| 5.3.1 | Population growth | Define birth rate, death rate, net migration, immigration and emigration. Explain why these vary between countries. |
| 5.3.2 | Size and structure of population | Explain optimum population and effects of increases/decreases in population size and changes in age and gender distribution. |
| 5.4.1 | Differences in development | Explain causes and consequences of differences in income, productivity, population growth, sector size, saving and investment, education, healthcare and natural resources. |

## 6 International Trade and Globalisation

| Ref | Syllabus focus | Planning notes / exam-ready wording |
| --- | --- | --- |
| 6.1.1 | Specialisation by country | Countries specialise when they focus on goods/services they can produce most efficiently or at lower cost. Analyse advantages and disadvantages. |
| 6.1.2 | Free trade | Free trade is international trade without protectionist restrictions. Analyse advantages and disadvantages. |
| 6.2.1 | Globalisation | Globalisation is growing connection between economies through trade, investment, migration, communication and multinational activity. |
| 6.2.2 | Changes in globalisation | Causes include changes in trade restrictions, transport costs, communication costs and MNC movement. Effects include changes in trade, competition, environment, migration, income distribution and development. |
| 6.2.3 | Multinational companies | MNCs operate in more than one country. Analyse advantages and disadvantages for host and home countries. |
| 6.2.4 | Trade restrictions | Methods include tariffs, import quotas, subsidies and embargoes. |
| 6.2.5 | Reasons for trade restrictions | Reasons include protecting infant, declining and strategic industries; avoiding dumping; reducing current account deficits; raising tax revenue; restricting demerit goods; and promoting environmental sustainability. |
| 6.2.6 | Consequences of trade restrictions | Analyse effects on the home country and trading partners, including advantages and disadvantages of restricting free trade. |
| 6.3.1 | Foreign exchange rate | The foreign exchange rate is the price of one currency in terms of another currency. |
| 6.3.2 | Buying and selling foreign currencies | Reasons include trade, speculation, government intervention, profit/interest/dividend payments, remittances and investment in capital goods. |
| 6.3.3 | Exchange-rate determination | A floating exchange rate is determined by demand and supply. Appreciation is a rise in currency value; depreciation is a fall. Fluctuations can be caused by export/import demand, interest rates and speculation. |
| 6.3.4 | Consequences of exchange-rate changes | Exchange-rate changes affect export/import prices and demand. |
| 6.4.1 | Current account structure | Components are trade in goods, trade in services, primary income and secondary income. Students calculate deficits and surpluses for the current account and components. |
| 6.4.2 | Causes of current account deficit/surplus | Deficits and surpluses can result from changes in imports, exports, income, competitiveness, inflation and exchange rates. |
| 6.4.3 | Consequences of current account deficit/surplus | Analyse effects on GDP, employment, inflation and foreign exchange rates. |
| 6.4.4 | Policies for balance of payments stability | Evaluate policies such as demand management, expenditure-switching, supply-side reform, exchange-rate measures and trade restrictions. |

## Formula Quick Reference

| Formula | Expression |
| --- | --- |
| PED | percentage change in quantity demanded / percentage change in price |
| PES | percentage change in quantity supplied / percentage change in price |
| Budget balance | government revenue - government expenditure |
| Unemployment rate | unemployed / labour force x 100 |
| Total cost | fixed cost + variable cost |
| Average total cost | total cost / output |
| Average fixed cost | fixed cost / output |
| Average variable cost | variable cost / output |
| Total revenue | price x quantity sold |
| Average revenue | total revenue / quantity sold |
| Profit | total revenue - total cost |
| Real GDP per head | real GDP / population |
| Net migration | immigration - emigration |
| Current account balance | trade in goods + trade in services + primary income + secondary income |

## Main 2027-2029 Changes to Note

| Area | Update |
| --- | --- |
| Assessment | Paper 1 is now 40 questions, 40 marks and 1 hour. Paper 2 is now 80 marks and 2 hours. AO3 weighting is lower than before. |
| Sustainability | Environmental sustainability is now integrated into macroeconomic aims, taxation, growth, globalisation and trade restrictions. |
| Removed or reduced content | Removed/reduced areas include trade unions as a standalone topic, growth of firms, role of government as a standalone topic, principles of taxation, claimant count, population pyramid interpretation, fixed exchange-rate systems and some PPC links. |
| Added or clearer content | Added/clearer areas include scarcity, elasticity boundary cases, monopoly in market failure, mixed-economy arguments, household age/culture, minimum-wage diagrams, mergers, ATC diagrams, investment and productivity, competitive/monopoly market effects, recession, seasonal unemployment, healthcare and poverty, globalisation changes, free trade and trade-restriction reasons. |
| Renumbering | Fiscal policy is now 4.2, monetary policy is 4.3, supply-side policy is 4.4, economic growth is 4.5, employment/unemployment is 4.6 and inflation is 4.7. |