Overview of the changes

The new Cambridge IGCSE and O Level Economics (0455) course has now been officially published! Teaching of the new syllabus starts in the 2025-26 academic year, with first examinations in 2027.

The new syllabus has been updated to incorporate themes of the environmental sustainability and global issues, which have been integrated across multiple topics. New content syllabus has been added on economics and the environment as well as changes in globalisation. Some content has been removed, such as:

• Trade unions (previously in section 3.4)

• Growth of firms (section 3.5.3)

• Principles of taxation (section 4.3.5).

Cambridge Assessment International Education (CAIE) has made the wording of both the subject content and assessment objectives clearer and more concise for easier understanding.

The weightings of the assessment objectives have also been adjusted, placing greater emphasis on AO1 (knowledge and understanding) and AO2 (economic analysis). There is now less emphasis on AO3 (evaluation).

Finally, CAIE has adjusted the number of marks and the exam durations, increasing both the marks and length of Paper 1, while shortening Paper 2 - refer to "Table 2 - Assessment changes: Old vs New syllabus" below. However, the assessment methods and the overall total number of marks remain unchanged.

What are the changes?

This section of the website highlights the differences between the outgoing and new syllabus. The subject content has been revised and updated. Please be aware of these changes if/when referring to resources for the outgoing syllabus, such as exam questions and mark schemes.

Unit 1 - The basic economic problem

• Unit 1.1 has been renamed as "The nature of the basic economic problem" (previously called "The nature of the economic problem").
• Unit 1.1.1. now includes "the concept of scarcity" as an explicit learning outcome.
• Unit 1.1.2 (Resource allocation decisions) has been added. This explicitly addresses the three basic economic questions which determine resource allocation: what to produce, how to produce, and who to produce for?
• The mobility of the factors of production (previously in Unit 1.2.2) has been removed from the syllabus. The mobility of labour is still covered in the new syllabus (in Unit 3.3.4).

Unit 2 - The allocation of resources

• Unit 2.1 is now "The role of markets in allocating resources" (formerly in Unit 2.2). However, the former Unit 2.1 ("Microeconomics and macroeconomics") has been removed from the syllabus. Other changes to Unit 2.1 are outlined in Table 1 below.

Table 1 - Unit 2: Old vs New syllabus

• Unit 2.4 The price mechanism (previously in Unit 2.2.3) has been moved to Unit 2.4.2.

• Unit 2.6 Price elasticity of demand (PED) - In Unit 2.6.5 (Significance of PED), the implications of PED for decision-making now include workers.

• Unit 2.7 Price elasticity of supply (PES) - The implications for decision making by consumers, producers and government has been removed (formerly Unit 2.8.4).

• Unit 2.9.2 "Definitions of terms associated with market failure" has been added as a sub-section. This covers the following terms: public goods, merit goods, demerit goods, private benefits, external benefits, social benefits, private costs, external costs, social costs, and monopoly. However, "factor immobility" has been removed as terminology associated with market failure.

• Unit 2.10.2 "Arguments for and against the mixed economic system" has been added to the syllabus (the advantages and disadvantages of the mixed economic system).

• Unit 2.10.2 has removed the minimum wage diagram (as part of government intervention to address market failures). However, this has been moved to Unit 3.3.2 (Wage determination).

• Unit 2.10.3 has been simplified with "the effects of maximum and minimum prices in labour and foreign exchange markets removed (only the effects of maximum and minimum prices in product markets remains). In addition, "The effectiveness of government intervention in overcoming the drawbacks of a market economic system." has been removed from the syllabus.

• Unit 2.10.3 - Regulation, privatisation, nationalisation, direct provision of goods and services, and quotas (such as for the extraction of natural resources) have been added to the syllabus as methods of government intervention to address market failures.

Quotas are often imposed on the extraction of natural resources, such as minerals and fossil fuels

Unit 3 - Microeconomic decision-makers

• Unit 3.1 - Trade unions have been removed as examples of microeconomic decision makers.

• Unit 3.3.2 (Wage determination) now includes trade unions and their relative bargaining power. This was previously covered in Unit 3.4 (Trade union) - This section of the syllabus now also includes drawing and interpretation of the effects of national minimum wages (previously featured in Unit 2.11.2 under the topic of market failure). Note that the role of trade unions in the economy (formerly in Unit 3.4.2) and the advantages and disadvantages of trade union activity (formerly in Unit 3.4.3) have both been removed from the new syllabus.

• In Unit 3.3.3 (Reasons for differences in wages), "Differences between primary, secondary, and tertiary sector workers" has been removed as a reason for wage differentials.

• Unit 3.3.5 (Division of labour) - This section of the syllabus no longer covers the advantages and disadvantages of division of labour for firms and countries (as was the case in the previous Unit 3.3.4). Note that specialisation by country is still covered in Unit 6.1.1.

• The previous Unit 3.5.3 (Causes and forms of the growth of firms) has been removed. There is no longer a need to teach internal growth or external growth.

• Unit 3.7 - "Types of market structure" has been renamed and is now called "Types of markets".

Unit 4 - Government and the macroeconomy

• Unit 4.1 in the previous syllabus ("The role of government") has been removed from the new syllabus. This means the previous learning outcome "the role of government (locally, nationally, and internationally)" is not in the new syllabus.

• Unit 4.1 is renamed as "Government macroeconomic intervention" (which was formerly called "The macroeconomic aims of government" in Unit 4.2 of the previous syllabus).

• There are now six macroeconomic aims in Unit 4.1, with "environmental sustainability" added to the syllabus. This includes "economic growth and environmental sustainability" as a possible conflict between two of the government's macroeconomic aims (this replaces "economic growth versus balance of payments stability" in the previous syllabus).

• Unit 4.2.1 - Definitions of both government budget deficit and government budget surplus have been added to the syllabus.

• Unit 4.2.1 - This section of the new syllabus also now requires students to calculate the size of a government budget (deficit/surplus).

• Unit 4.2.2 - The reasons for and effects of government spending are in this section of the new syllabus (previously, the syllabus only covered the reasons for government spending).

• Unit 4.2.3 - The reasons for taxation are now explicitly stated in the syllabus: (i) raising revenue, (ii) discouraging consumption of demerit goods, (iii) reducing imports, (iv) redistributing income, (v) influencing total demand, and (vi) encouraging environmental sustainability.

• Unit 4.3.5 of the old syllabus (The principles of taxation) has been removed. This means there is no need to teach the qualities of a good tax.

• Unit 4.5.3 - GDP per head (capita) has been removed as a measurement of economic growth (ony real gross domestic product (GDP) needs to be taught in the new course). Taxation is now covered in Unit 4.2.3 Taxation of the new syllabus.

• Unit 4.7 is renamed as "Inflation". It was previously called "Inflation and deflation". Deflation is no longer covered beyond the definition, i.e., there is no need to teach the causes and consequences of deflation or the government policies used to tackle deflation.

Unit 5 - Development

• Unit 5.4.1 (Causes and consequences of international differences) - "Environmental resources" has been added as a cause and consequence of differences in economic development between countries.

• Unit 5.2.2 (Causes of poverty) - A fifth cause has been added to the syllabus: environmental factors.

• Unit 5.2.3 (Policies to alleviate poverty and redistribute income) - A sixth policy has been added to the syllabus: improved healthcare provision.

• Unit 5.3.2 (The effects of changes in the size and structure of populations) - this section of the syllabus has removed the need to interpret population pyramids from the previous Unit 5.3.3 (i.e., it is no longer assessed in Unit 5.3.2). However, age and gender distribution of population both continue to feature in the new syllabus.

• Unit 5.4.1 (differences in economic development between countries) - There has been a change in terminology, with the new syllabus stating "causes and consequences of international differences", which was referred to as "causes and impacts of differences".

• Unit 5.4.1 - "Natural resources" has been added as a cause and consequence of international differences in economic development between countries.

Unit 6 - International trade and globalisation

• Unit 6.1 is renamed as "Specialisation and free trade" (which was previously called "International specialisation"). Hence, free trade (including the advantages and disadvantages) has moved from Unit 6.2.

• Unit 6.2 is renamed as "6.2 Globalisation and trade restrictions" (which was previously called "Globalisation, free trade and protection").

• Unit 6.2.2 has completely new content: (1) causes of changes in globalisation, and (2) effects of changes in globalisation. The specific points are as follows:

1. Causes of changes in globalisation:
   - changes in trade restrictions
   - changes in transport costs
   - changes in communication costs
   - movement of multinational companies (MNCs)

2. Effects of changes in globalisation:
   - international trade
   - competition
   - the environment
   - migration
   - income distribution
   - economic development.

• Unit 6.2.5 (Reasons for trade restrictions) - There is now explicit reference to the protection of sunrise (infant) industries and sunset (declining) industries. This unit also now includes 4 additional reasons for trade restrictions:

1. to reduce a deficit on the current account of the balance of payments
2. to raise tax revenue
3. to restrict the import of demerit goods
4. to promote environmental sustainability

• Unit 6.3.2 (Reasons for buying and selling foreign currencies) has completely new content, covering the following reasons for buying and selling foreign currencies:

1. trade in goods and services
2. speculation (in currency markets)
3. government intervention in currency markets
4. payment of profit, interest, and dividends between countries
5. workers’ remittances (money sent from overseas workers or incomes earned abroad)
6. investment in capital goods between countries.

• Unit 6.3.3 (Determination of foreign exchange rate in foreign exchange market) - The entry or departure of MNCs has been removed from the syllabus as a determinant of foreign exchange rates. In addition, fixed exchange rates have been removed. However, note that government intervention in currency markets is still covered in Unit 6.3.2 (Reasons for buying and selling foreign currencies). Nevertheless, there is no need to cover fixed exchange rates.

Assessment changes

The weightings of the assessment objectives (AO) have changed in the new syllabus. The weightings of AO1 Knowledge and understanding and AO2 Analysis have increased (mainly reflected in Paper 1). The weighting of AO3 Evaluation has decreased, with Question 1 in Section A having been reduced in the number of marks. The layout and wording of the Paper 2 Mark Scheme has changed (including that for the 8-mark extended response). Overall, the marking criteria stay largely the same.

Cambridge has changed the marks and exam times by increasing Paper 1 and shortening Paper 2, while keeping the assessment methods the same. Paper 1 still containts Multiple Choice Questions (MCQs) and the structured questions remain in Paper 2. Table 2 below shows a comparison of the assessment changes between the outgoing syllabus and new syllabus (first exams 2027).

Table 2 - Assessment changes: Old vs New syllabus

Finally, it is important to point out that along with the new syllabus, teachers should check the updated specimen papers and mark schemes on the Cambridge CAIE website. These resources will help students understand the exam requirements and question wording, including the use of command words for each exam question. The mark schemes also show how students should answer questions to meet the assessment objectives.

Resources for the new syllabus

Whilst InThinking IGCSE Economics will remain the single most comprehensive resource available for the new IGCSE Economics course, teachers and students may be interested in the two Cambridge-endorsed resources below.

The InThinking IGCSE Economics website will be fully revised and updated to match the requirements of the new syllabus, ready for first teaching in 2025.

The 3rd edition Hodder Education textbook (ISBN-13: 9781036010737) is endorsed by Cambridge and has been updated to support the new syllabuses for first examinations from 2027. Details of the new textbook can be found on the publisher's website here.

The textbook enables students to explore Economics as a real-world subject through updated case studies from around the world. The new edition provides in-depth coverage of the revised Cambridge IGCSE™, IGCSE (9-1) and O Level Economics syllabuses (0455/0987/2281). It provides accessible content for all learners, with updated practice questions, ESL-friendly content, and an improved structure.

Answers to all the exam practice questions and class activities are available to download free from the publisher's website here.

The textbook is also available for pre-order here on Amazon.

The 3rd edition workbook in paperback (ISBN-13: 9781036010751) is also endorsed by Cambridge CAIE. Details can be found on Hodder Education's website here.

The updated workbook is an ideal course companion or homework book for use throughout the course. It reinforces learning and deepens understanding of the key topics covered in the latest Cambridge IGCSE™, IGCSE (9-1) and O Level Economics syllabuses (0455/0987/2281). The workbook consolidates knowledge and skills with updated exercises based on authentic and up-to-date contexts and problems.

All answers available free from the publisher's website here.