Cambridge IGCSE™: Economics 0455/23 May/June 2020

Cambridge IGCSE™
ECONOMICS 0455/23
Paper 2 Structured Questions May/June 2020
MARK SCHEME
Maximum Mark: 90
Published
Students did not sit exam papers in the June 2020 series due to the Covid-19 global pandemic.
This mark scheme is published to support teachers and students and should be read together with the
question paper. It shows the requirements of the exam. The answer column of the mark scheme shows the
proposed basis on which Examiners would award marks for this exam. Where appropriate, this column also
provides the most likely acceptable alternative responses expected from students. Examiners usually review
the mark scheme after they have seen student responses and update the mark scheme if appropriate. In the
June series, Examiners were unable to consider the acceptability of alternative responses, as there were no
student responses to consider.
Mark schemes should usually be read together with the Principal Examiner Report for Teachers. However,
because students did not sit exam papers, there is no Principal Examiner Report for Teachers for the June
2020 series.
Cambridge International will not enter into discussions about these mark schemes.
Cambridge International is publishing the mark schemes for the June 2020 series for most Cambridge
IGCSE™ and Cambridge International A & AS Level components, and some Cambridge O Level
components.
This document consists of 14 printed pages.
© UCLES 2020 [Turn over

0455/23 Cambridge IGCSE – Mark Scheme May/June 2020
PUBLISHED
Generic Marking Principles
These general marking principles must be applied by all examiners when marking candidate answers.
They should be applied alongside the specific content of the mark scheme or generic level descriptors
for a question. Each question paper and mark scheme will also comply with these marking principles.
GENERIC MARKING PRINCIPLE 1:
Marks must be awarded in line with:
• the specific content of the mark scheme or the generic level descriptors for the question
• the specific skills defined in the mark scheme or in the generic level descriptors for the question
• the standard of response required by a candidate as exemplified by the standardisation scripts.
Marks awarded are always whole marks (not half marks, or other fractions).
Marks must be awarded positively:
• marks are awarded for correct/valid answers, as defined in the mark scheme. However, credit
is given for valid answers which go beyond the scope of the syllabus and mark scheme,
referring to your Team Leader as appropriate
• marks are awarded when candidates clearly demonstrate what they know and can do
• marks are not deducted for errors
• marks are not deducted for omissions
• answers should only be judged on the quality of spelling, punctuation and grammar when these
features are specifically assessed by the question as indicated by the mark scheme. The
meaning, however, should be unambiguous.
Rules must be applied consistently e.g. in situations where candidates have not followed
instructions or in the application of generic level descriptors.
Marks should be awarded using the full range of marks defined in the mark scheme for the question
(however; the use of the full mark range may be limited according to the quality of the candidate
responses seen).
Marks awarded are based solely on the requirements as defined in the mark scheme. Marks should
not be awarded with grade thresholds or grade descriptors in mind.
© UCLES 2020 Page 2 of 14

PUBLISHED
1 Components using point-based marking:

Point marking is often used to reward knowledge, understanding and application of skills. We
give credit where the candidate’s answer shows relevant knowledge, understanding and
application of skills in answering the question. We do not give credit where the answer shows
confusion. From this it follows that we:
a credit answers which are worded differently from the mark scheme if they clearly convey the
same meaning (unless the mark scheme requires a specific term)
b credit alternative answers/examples which are not written in the mark scheme if they are
correct
c credit answers where candidates give more than one correct answer in one
prompt/numbered/scaffolded space, where extended writing is required rather than list-type
answers. For example, questions that require n reasons (e.g. State two reasons…).
d DO NOT credit answers simply for using a ‘key term’ unless that is all that is required. (Check
for evidence it is understood and not used wrongly.)
e DO NOT credit answers which are obviously self-contradicting or trying to cover all
possibilities, e.g. a scattergun approach to a question asking for n items
f DO NOT give further credit for what is effectively repetition of a correct point already credited
unless the language itself is being tested. This applies equally to ‘mirror statements’ (i.e.
polluted/not polluted).
g DO NOT require spellings to be correct, unless this is part of the test. However spellings of
syllabus terms must allow for clear and unambiguous separation from other syllabus terms
with which they may be confused (e.g. erosion/corrosion).
2 Presentation of mark scheme:

• Slashes (/) or the word ‘or’ separate alternative ways of making the same point.
• Semi colons (;) bullet points (•) or figures in brackets (1) separate different points.
• Content in the answer column in brackets is for examiner information / context to clarify the
marking but is not required to earn the mark
3 Calculation questions:
• The mark scheme will show the steps in the most likely correct method(s), the mark for each
step, the correct answer(s) and the mark for each answer.
• If working/explanation is considered essential for full credit, this will be indicated in the
question paper and in the mark scheme. In all other instances, the correct answer to a
calculation should be given full credit, even if no supporting working is shown.
• Where the candidate uses a valid method which is not covered by the mark scheme, award
equivalent marks for reaching equivalent stages.
• Where an answer makes use of a candidate’s own incorrect figure from previous working,
the ‘own figure rule’ (OFR) applies: full marks will be given if a correct and complete method
is used. Further guidance will be included in the mark scheme where necessary and any
exceptions to this general principle will be noted.
4 Annotation:
• For point marking, ticks are used to indicate correct answers and crosses to indicate wrong
answers. There is a direct relationship between ticks and marks.
• Other annotations will be used by examiners as agreed during standardisation, and the
meaning will be understood by all examiners who mark that paper.
• For levels of response marking, each level awarded should be clearly annotated on the script
the first time it is achieved.

PUBLISHED
PREPARATION FOR MARKING
1 Make sure that you have completed the relevant training and have access to the RM Assessor
Guide.
2 Make sure that you have read and understand the question paper, which you can download from
https://support.rm.com/ca
3 Log in to RM Assessor then mark and submit the required number of practice and standardisation
scripts. You will need to mark the standardisation scripts to the required accuracy in order to be
approved for marking live scripts. You may be asked to re-mark them, or to mark a second
sample, if you do not meet the required accuracy on your first attempt.
MARKING PROCESS
1 Mark strictly to the FINAL mark scheme, applying the criteria consistently and the general
marking principles outlined on the previous page.
2 If you are in doubt about applying the mark scheme, consult your Team Leader.
3 Mark at a steady rate through the marking period. Do not rush, and do not leave too much until
the end. If you anticipate a problem in meeting the deadline, contact your Team Leader
immediately and the Examiners’ Helpdesk.
4 Examiners will prepare a brief report on the performance of candidates to send to their Team
Leader via email by the end of the marking period. The Examiner should note strengths seen in
answers and common errors or weaknesses. Constructive comments on the question paper,
mark scheme or procedures are also appreciated.
MARKING SPECIFICS
Crossed out work
1 All a candidate’s answers, crossed out or not, optional or not, must be marked.
2 The only response not to be marked is one that has been crossed out and replaced by another
response for that exact same question.
3 Consequently, if a candidate has crossed out their response to an optional question and gone on
to answer a different optional question then both attempts must be marked. The higher mark will
be awarded by the system according to the rubric.
0 (zero) marks or NR (no response)

1 Award NR if there is nothing at all written in answer to that question (often the case for optional
questions).
2 Award NR if there is a comment which is not an attempt at the question (e.g. ‘can’t do it’ or ‘don’t
know’ etc.)
3 Award NR if there is a symbol which is not an attempt at the question, such as a dash or question
mark.
4 Award 0 (zero) if there is any attempt at the question which does not score marks. This includes
copying the question onto an Answer Booklet.
Annotation
1 Every question must have at least one annotation e.g. <NAQ> if it is an NR and <X> or <seen> if
0 marks are awarded.
2 Every mark awarded for a question (as shown in the mark input box to the right of the
screen) must be indicated by a correctly positioned tick on the script. The number in the
box below the tick annotation must be equal to the mark awarded in the input box.
3 Every page of a script must have at least one annotation e.g. <BP> for a blank page.

PUBLISHED
Question Answer Marks
1(a) Calculate the total number of people over 60 years old in Greece in 1
2015.
27% × 10.8 million = 2.92 million
1(b) Explain what is meant by an unemployment rate of 24%. 2
Logical explanation which might include:

24% of the total labour force (1) is actively searching for jobs (willing and
able to work) but cannot find work/job (1)
1(c) Identify two reasons for the recovery of the European economies, 2
other than Greece.
successful supply-side policy measures (1)

improving global economy (1)
1(d) Explain the two supply-side policy measures being used by the Greek 4
government.

labour market reforms (1) making it easier to hire and fire workers / giving
workers more skills to enable them to take various jobs / making it easier for
workers to move from one place to another or one job to another (1)
Privatisation (1) increasing efficiency due to the profit-maximising motive (1)
1(e) Analyse how two of Greece’s population trends may have affected its 4
economy.
Coherent analysis which might include:

The Greek population has been falling ever since 2010 (1) resulting in a
smaller labour force (1).
Ageing population (1) increase in dependency ratio (1).
Emigration (1) loss of skilled workers (1).
1(f) Analyse the relationship between Greece’s GDP per head and its HDI 5
value.

Greece’s GDP per head has been falling from 2010–2015 (1) but HDI has
been increasing (1) negative relationship (1) data for GDP per head (1) data
for HDI value (1). This could be because of improving education (1) and
healthcare (1).
HDI consists of GDP per head / education / health (1) hence even though
GDP per head is falling this is more than offset by rise in education / health
(1).

PUBLISHED
1(g) Discuss whether or not having a strong foreign exchange rate is a 6

problem for Greece’s economy.
Generic example mark

Tax revenue may decrease… 1
...because of reason e.g. incomes may be lower. 1
Tax revenue may increase because incomes may be higher i.e.
0
reverse of a previous argument.
Tax revenue may increase because of a different reason i.e. not
the reverse of a previous argument e.g. government spending on
1
subsidies may stimulate the economy more than spending on
education.
Up to 4 marks for why it might be a problem:

Strong foreign exchange rate will lead to high price of exports (1) decreasing
the quantity demanded for exports (1) decreasing value of exports (1) strong
foreign exchange rate will lead to low price of imports (1) increasing the
quantity demanded for import (1) increasing value of imports (1) decreasing
net exports (1) decreasing total demand (1) decreasing economic growth (1)
decreasing employment (1).
Up to 4 marks for why it might not be a problem:

Strong foreign exchange rate will lead to low price of imported raw
materials, machines / capital, or semi manufactured goods (1) this could
decrease cost of production (1) decreasing the price of domestically
produced goods (1) increasing demand / consumption / exports (1)
increasing total demand (1) increasing economic growth (1) increasing
employment (1)
1(h) Discuss whether or not a market economic system improves living 6

standards.
Up to 4 marks for why it does improve living standards:

Economic freedom (1) consumers and producers can make their own
decisions on what to consume and produce (1) no government intervention
enables more efficient allocation of resources (1) firms react to the wants of
consumers to gain profits for themselves then consumers are fairly likely to
get what they want and gain high levels of satisfaction from their income (1)
costs are lower and prices are lower (1) more affordable (1).
Up to 4 marks for why it does not improve living standards:

Instability and uncertainty (1) Unemployment especially when there is a
recession (1) high inflation could decrease affordability (1) monopolies
exploit consumers (1) workers paid low wages (1) pollution and other
external costs (1) Unequal distribution of income and wealth (1) under
provision of public goods (1).

PUBLISHED
2(a) State two functions of local government. 2
• providing public goods

• providing street lights
• local recreation activities
• cleaning
• waste collection and management 0/2
• infrastructure investment PLEASE LEARN
• providing tax incentive
• zoning
• provision of low income housing
• supporting local businesses
2(b) Explain how a lower cost of living can encourage population growth. 4

Cheaper to bring up a child (1) education and healthcare cost lower or any
other example (2) parents don’t have to work so hard (1) more time to raise
children (1). 2/4
Lower cost of living could lower death rate (1) as healthcare is more
affordable (1) and people can live longer (1).
Lower cost of living could encourage net migration (1) cheaper to live in that
country (1).
2(c) Analyse the influences on the mobility of two factors of production. 6

Availability of proper infrastructure (1) to move from place to place (1) e.g.
trains / roads (1) whether it is affordable or not (1).
Cost of living differences (1) whether workers can afford to move to another
place (1) e.g. housing costs, cost of education (1).
Availability of information (1) on jobs elsewhere (1).
Tax rate changes (1) lower tax rates could encourage workers to move to
another country to take advantage of lower taxes (1) / entrepreneurs could 6/6
be encouraged to move to a lower tax economy (1).
Regulation changes (1) could limit movement of labour or capital (1).
Level of education (1) could make labour more occupationally mobile (1).
No reward for only identifying the factors of production.

Accept other relevant factors e.g. cultural differences (up to 3 marks each).

PUBLISHED
2(d) Discuss whether or not increased investment is beneficial to an 8

economy.
In assessing each answer, use the table opposite.

Level Description Marks
3 A reasoned discussion which accurately examines both 6–8
sides of the economic argument, making use of
economic information and clear and logical analysis to
evaluate economic issues and situations. One side of
the argument may have more depth than the other but,
overall, both sides of the argument are considered and
developed. There is thoughtful evaluation of economic
concepts, terminology, information and/or data
appropriate to the question. The discussion may also
point out the possible uncertainties of alternative
decisions and outcomes.
2 A reasoned discussion which makes use of economic 3–5
information and clear analysis to evaluate economic
issues and situations. The answer may lack some
depth and development may be one-sided. There is
relevant use of economic concepts, terminology,
information and data appropriate to the question.
1 There is a simple attempt at using economic definitions 1–2
and terminology. Some reference may be made to
economic theory, with occasional understanding.
0 A mark of zero should be awarded for no creditable 0
content.
Why it might be beneficial:

• Investment is the purchasing of capital goods which increase a
country’s productive capacity / supply-side capacity of the economy
• Investment increase total demand
• Investment increase demand for workers, decrease unemployment,
increase income
• Increase spending on research and development and increase
productivity
• Create economic growth 8/8
Why it might not be beneficial:

• Investments may lead to inflation (demand-pull) in the short run
• Investments on capital goods has an opportunity cost of consumer
goods production
• Investments sacrifices current living standards for future living
standards
• Foreign investments might be very uncertain – knows no loyalty – very
mobile.
• Capital goods may be a substitute for labour, which creates
unemployment.

PUBLISHED
3(a) State two benefits of free trade. 2

2/2
Any two from:
Increase choices, more competition, lower prices, more specialisation
3(b) Explain two reasons why governments levy taxes. 4

To be able to fund government spending (1) types of government spending
(1) to improve standards of living (1).
To be able to control inflation (1) fiscal policy (1) reducing total demand (1).
To reduce inequality (1) tax the rich and help the poor (1). 4/4
To discourage the consumption of demerit good (1), to improve allocation of
resources / reduce external cost (1) to change external costs to private
costs (1) e.g. reduce pollution (1).
To reduce imports (1) to protect home producers (1).
3(c) Analyse, using a production possibility curve (PPC) diagram, the 6

impact of higher labour productivity on an economy.
5/6
OUTPUT PER
Up to 4 marks for the diagram: WORKER =
Axes correctly drawn (1) QUANTITY
Initial curve or line sloping downward drawn to the axes (1)
New curve or line sloping downward drawn to the axes (1)
Shift to the right indicated by arrow or lettering (1).
Up to 2 marks for coherent analysis which might include:

Higher labour productivity will increase output per worker (1) increase
productive capacity (1).

PUBLISHED
3(d) Discuss whether or not MNCs always benefit their host countries. 8
In assessing each answer, use the table below.

content.
Why they might:

• bring in more investment
• increase total demand and economic growth
• provide more employment opportunities
• bring in more foreign capital and more advanced machinery.
competition to domestic firms?
Why they might not:
• MNCs might exploit local workers, pay low wages / provide low quality
working environments
• most profits of MNCs not reinvested back into the domestic economy
but brought back to home country
• big MNCs may meddle with domestic policy making.

PUBLISHED
4(a) Define profit maximisation. 2
When a firm produces at the level of output (1) which makes the highest
profits for the firm (1).
0/2
'produces at'
When a firm produces where the gap between TR and TC (1) is largest (1). 'tr and tc' not just
cost and rev
Reward, but do not expect, produce at a point where MC = MR
4(b) Explain two types of mergers 4

Horizontal (1) when two or more firms from the same industry and the same
4/4
stage of production merge (1).
Vertical (1) when two or more firms from the same industry but different
stage of production merge (1).
Conglomerate (1) when two or more firms from different industries merge
(1).
Allow vertical forward and vertical backward as two separate points.
4(c) Analyse how fiscal policy can encourage firms to produce more. 6

Reduce corporation tax (1) could lead to more profits after tax (1) enabling
firms to invest more and expand (1).
Reduce income tax (1) could increase spending (1) raise total demand (1) 6/6
encouraging firms to produce more (1). (11/6)
Increase government spending (1) such as increasing subsidies (1) could
lead to firms being able to expand production (1) decreasing cost of
production (1) decreasing prices (1) increasing demand for the firms’
products (1).

PUBLISHED
4(d) Discuss whether or not maximum prices are beneficial. 8

content.
Why maximum prices will be beneficial:

• More affordable products
• More choices for consumers
• Less poverty
• To prevent exploitation of consumers by producers – especially
monopolies 5/8
• Firms forced to become more efficient to be able to make profit.
Why maximum prices will not be beneficial:

• Producers will not want to supply that much
• Firms leave the market
• Could lead to shortage
• Black market creation
• Less choices for consumers
5(a) Define market failure. 2

2/2
Market failure is when the market mechanism / price mechanism / demand
and supply (1) does not lead to an efficient allocation of resources (1).

PUBLISHED
5(b) Explain two influences, other than weather, that could affect the 4
demand for a product.

Price of substitutes (1) If the price of substitutes increase, demand for the
product will increase or vice versa (1).
Price of complements (1) If the price of complements increase, demand for
the product will decrease or vice versa (1). 3/4
Expected future prices (1) if the price is expected to increase in the future,
demand for the product will increase now or vice versa (1).
Advertising (1) if there is a successful advertising campaign, demand will
increase (1).
Income (1) if income increases, demand will increase for a normal good or
vice versa (1).
Change in price (1) if price increases, demand will contract, vice versa (1).
5(c) Analyse the possible effects of a shortage of a product such as energy 6

on an economy.

Low supply (1) high prices (1) increase cost of production for firms (1). Cost-
push inflation (1) firms might try to cut cost (1) by firing workers (1) increase 4/6
unemployment (1). READ MS
Increase price of goods and services (1) decrease affordability (1) decrease
demand for goods and services (1) decrease standards of living (1).
More imports to address shortage (1) less production (1) leading to lower
growth rate (1).

PUBLISHED
5(d) Discuss whether or not workers benefit from division of labour. 8

content.
Why it is a benefit:
• saves time
• increased skills
• increased productivity
• increased wages
Why it is not a benefit: 8/8

• increased boredom
• limited skills
• lack of motivation
• lack of occupational mobility
• overdependence on others

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This document consists of 14 printed pages.

© UCLES 2020 [Turn over

Generic Marking Principles

GENERIC MARKING PRINCIPLE 1:

Marks must be awarded in line with:

GENERIC MARKING PRINCIPLE 2:

GENERIC MARKING PRINCIPLE 3:

Marks must be awarded positively:

GENERIC MARKING PRINCIPLE 4:

GENERIC MARKING PRINCIPLE 5:

GENERIC MARKING PRINCIPLE 6:

© UCLES 2020 Page 2 of 14

1 Components using point-based marking:

2 Presentation of mark scheme:

© UCLES 2020 Page 3 of 14

PREPARATION FOR MARKING

0 (zero) marks or NR (no response)

© UCLES 2020 Page 4 of 14

Question Answer Marks

27% × 10.8 million = 2.92 million

1(b) Explain what is meant by an unemployment rate of 24%. 2

Logical explanation which might include:

successful supply-side policy measures (1)

Logical explanation which might include:

Coherent analysis which might include:

Coherent analysis which might include:

© UCLES 2020 Page 5 of 14

Question Answer Marks

1(g) Discuss whether or not having a strong foreign exchange rate is a 6

Generic example mark

Up to 4 marks for why it might be a problem:

Up to 4 marks for why it might not be a problem:

1(h) Discuss whether or not a market economic system improves living 6

Up to 4 marks for why it does improve living standards:

Up to 4 marks for why it does not improve living standards:

© UCLES 2020 Page 6 of 14

Question Answer Marks

2(a) State two functions of local government. 2

• providing public goods

Logical explanation which might include:

2(c) Analyse the influences on the mobility of two factors of production. 6

Coherent analysis which might include:

No reward for only identifying the factors of production.

© UCLES 2020 Page 7 of 14

Question Answer Marks

2(d) Discuss whether or not increased investment is beneficial to an 8

In assessing each answer, use the table opposite.

Why it might be beneficial:

Why it might not be beneficial:

© UCLES 2020 Page 8 of 14

Question Answer Marks

3(a) State two benefits of free trade. 2

3(b) Explain two reasons why governments levy taxes. 4

Logical explanation which might include:

3(c) Analyse, using a production possibility curve (PPC) diagram, the 6

Up to 2 marks for coherent analysis which might include:

© UCLES 2020 Page 9 of 14

Question Answer Marks