Cambridge IGCSE Economics: Employment and unemployment (0455) – Practice Questions

These are original questions written for Marlbridge, for revision and practice on this content. They are not reproduced past-paper questions, and they do not replicate the exam’s exact structure, question count or mark tariffs – examination boards hold copyright in their own papers. Use these alongside the official past papers from your board or school.

These questions cover section 4.7 of the Cambridge IGCSE Economics (0455) syllabus for examination in 2026. The syllabus is not tiered. All countries and figures are invented. Learn the content first from the study guide and the revision notes. Other links: the Cambridge IGCSE Economics hub, the printable checklist and the free diagnostics.

Questions

1. Define unemployment. [2]

2. In Country E, 2,640,000 people are employed and 160,000 are unemployed. Calculate the unemployment rate to 1 decimal place. Show your working. [3]

3. In Country A, the claimant count is 85,000 but a labour force survey estimates 120,000 unemployed. Explain two reasons for the difference. [4]

4. Name the type of unemployment in each case.

(a) A trained nurse spends six weeks looking for a better-paid hospital post. [1] (b) A shipyard closes for good because its type of vessel is no longer in demand, and the welders have no other skills. [1] (c) A recession cuts consumer spending, so shops and factories lay off staff. [1] (d) Explain why unemployment of the type in (c) tends to fall when the economy recovers. [1]

5. The table shows the share of total employment by sector in Country G.

Sector	Year 1 (%)	Year 2 (%)
Primary	48	20
Secondary	22	28
Tertiary	30	52

(a) State the change in the tertiary share. [1] (b) Total employment in year 2 is 6,000,000. Calculate the number employed in the tertiary sector. [2] (c) Explain one reason why the tertiary share rises as an economy develops. [2]

6. Explain (a) why the proportion of women in the labour force may rise and (b) why the public-sector share of employment may fall as a country moves towards a market economy. [4]

7. Explain one cost and one possible benefit of high unemployment for firms. [4]

8. In Country H, unemployment rises by 90,000. Each unemployed person pays 2,000 less tax and receives 3,500 in benefit. An average worker produces 25,000 of output a year (invented currency units).

(a) Calculate the total effect on the government’s budget. [2] (b) Calculate the output lost. [1] (c) Explain why lost output is a cost to the whole economy. [2]

9. Explain three ways in which long-term unemployment may harm an individual. [3]

10. Country J’s unemployment is mainly structural after its textile industry closed. Explain two policies the government could use to reduce it. [6]

11. Country K has a labour force of 10,000,000. Unemployment is 700,000, mostly cyclical after a recession. The government raises spending by 300,000,000. The multiplier is 2.0, and each 30,000 of extra output creates one job (assume the labour force stays the same).

(a) Calculate the new unemployment rate. [3] (b) Evaluate whether this spending increase is the best policy for Country K. [6]

Answers

1. A person without a job [1] who is able and willing to work and actively looking for work at the going wage [1]. [2] Examiner insight: Missing “actively looking” is a common way to lose the second part, because it separates the unemployed from students and retired people.

2. Labour force = 2,640,000 + 160,000 = 2,800,000 [1]. Rate = 160,000 / 2,800,000 x 100 [1] = 5.7% [1]. [3] Examiner insight: Dividing by 2,640,000 gives 6.1%, which is the usual wrong route; showing the labour force line makes your method visible even if arithmetic slips.

3. Reason 1: some people want work but are not entitled to benefit, for example those whose entitlement has run out [1], so they are in the survey but not in the claimant count [1]. Reason 2: some people do not claim, because they do not know how or consider the benefit too small [1], so the count understates unemployment compared with the survey [1]. The gap is 35,000. [4] Examiner insight: A reason plus its effect on the figure gains credit; a bare list of reasons usually does not. Note that “the survey is a sample” is a reason for error, not a reason for the gap to be this direction.

4. (a) Frictional [1]. (b) Structural [1]. (c) Cyclical [1]. (d) Total demand rises, so firms sell more, raise output and rehire [1]. [4] Examiner insight: For (d), a link from higher demand to higher hiring is the point; “the economy gets better” alone repeats the question.

5. (a) 52 - 30 = 22 percentage points (a rise) [1]. (b) 0.52 x 6,000,000 [1] = 3,120,000 [1]. (c) As incomes rise, households spend a larger share on services such as travel and education [1], so tertiary firms hire more workers [1]. [5] Examiner insight: Writing “22%” instead of 22 percentage points risks confusion because the table is already in percentages; state the unit precisely.

6. (a) Social attitudes change so paid work is more accepted for women [1]; more girls complete education, so more qualify for jobs [1]. (b) The government privatises state firms and reduces its role in production [1], so private firms employ a larger share [1]. [4] Examiner insight: Each cause needs its consequence; “attitudes change” with no link to the labour force gains less than the full chain.

7. Cost: unemployment cuts household incomes and spending [1], so firms sell less and profits fall [1]. Benefit: a large pool of job seekers makes hiring easier [1] and holds down wage demands, lowering costs [1]. [4] Examiner insight: Questions that ask for both a cost and a benefit are asking for balance; two costs would not answer it.

8. (a) 90,000 x (2,000 + 3,500) [1] = 495,000,000 worse for the budget [1]. (b) 90,000 x 25,000 = 2,250,000,000 [1]. (c) Labour that could make goods and services sits unused [1], so total output is below what the economy could achieve and the country sits inside its production possibility curve [1]. [5] Examiner insight: In (a), adding only the benefit or only the tax gives half the figure; check that both effects are in the working.

9. Income falls for a long period, so living standards drop [1]. Skills and confidence fade, making re-employment harder [1]. Stress and ill health may increase [1]. [3] Examiner insight: Three separate harms are needed; repeating “no money” in different words counts once.

10. Policy 1, retraining: government funds courses in skills that firms need [1]; workers can then fill vacancies in growing industries [1], although the courses take time and not all will succeed [1]. Policy 2, help with moving costs or subsidies for firms to locate in the affected region [1]; jobs and workers are brought together [1], but it is costly and some workers will not move [1]. [6] Examiner insight: A policy aimed at demand (such as a tax cut) does not fit structural unemployment; an answer that says why it fits the cause is stronger than a list of policies.

11. (a) Income rise = 300,000,000 x 2.0 = 600,000,000 [1]. Jobs = 600,000,000 / 30,000 = 20,000 [1]. Unemployed = 680,000, so rate = 680,000 / 10,000,000 x 100 = 6.8% [1]. (b) For: the unemployment is mainly cyclical, so a rise in demand suits the cause [1]; spending acts through the multiplier, so jobs grow beyond the first round [1]. Against: the rate falls only from 7.0% to 6.8%, so the effect is small [1]; the budget deficit rises [1]; if the economy is near capacity, prices may rise [1]. Judgement: it is appropriate for cyclical unemployment but is not enough alone, so combine it with lower interest rates or training for those who remain unemployed [1]. [9] Examiner insight: A judgement that refers back to the data (7.0% to 6.8%) is stronger than one that only says “it depends”.

Where marks are usually lost

• Dividing by employment or the population rather than the labour force.
• Missing “actively seeking work” from the definition of unemployment.
• Mixing up percentages and percentage points.
• Giving a reason for the claimant count and survey gap without linking it to the figures.
• Naming a type of unemployment with no link to the cause in the scenario.
• Making one point where the question asks for a cost and a benefit.
• Offering one policy for all types of unemployment.
• Ending an evaluation with no judgement.

Next steps

• Review the revision notes and the study guide.
• Check progress against the printable checklist and the course hub.
• Take the free 10-minute diagnostics to find weak spots.
• Book a free trial class at /trial/.

Official syllabus

Source: Cambridge IGCSE Economics (0455) syllabus for examination in 2026, version 2, Cambridge University Press & Assessment (Cambridge International), section 4.7.