0455_m26_gt — 2026 March Economics 0455 Grade Threshold · Cambridge CAIE IGCSE

Confusing budget deficit with current account deficit

“Some candidates confused a government budget deficit with a deficit on the current account of the balance of payments”— 0455 Paper 2, June 2023

How to fix: Budget deficit = government spends more than it receives in tax revenue (fiscal). Current account deficit = a country imports more goods/services than it exports (trade). These are completely different — one is about government finances, the other is about international trade.

PED calculation and interpretation errors — confusing elastic with inelastic

How to fix: PED = % change in quantity demanded ÷ % change in price. If PED > 1, demand is elastic (responsive). If PED < 1, demand is inelastic (unresponsive). Always check: did quantity change by a LARGER or smaller percentage than price? Larger = elastic.

Demand vs quantity demanded — confusing shifts with movements along the curve

How to fix: A change in PRICE causes a movement along the demand curve (change in quantity demanded). A change in a NON-PRICE factor (income, tastes, substitutes) causes the whole curve to SHIFT (change in demand). Use the correct terminology — examiners distinguish between them.