CBA Forecasting & Revenue Estimation 2

Question 1

In revenue forecasting, the 'cone of uncertainty' widens as the forecast horizon extends because:

Accepted Answer

Cumulative forecast errors grow with each additional period

Answer

Data sources become less reliable over time

Answer

Seasonal adjustments compound annually

Answer

Regression coefficients become negative

Question 2

A budget analyst calculates a MAPE of 8% for a revenue forecast. This indicates that on average, the forecast was off by:

Accepted Answer

8% of the actual revenue value

Answer

8 cents per dollar of actual revenue

Answer

8 percentage points above actual revenue

Answer

8 basis points from the benchmark

Question 3

Which scenario planning approach assigns probability weights to alternative economic scenarios before blending them into a single revenue estimate?

Accepted Answer

Probabilistic scenario weighting

Answer

Deterministic forecasting

Answer

Zero-based forecasting

Answer

Naive forecasting

Question 4

The leading economic indicator most commonly used to forecast individual income tax revenues is:

Accepted Answer

Personal income and wages

Answer

Consumer Price Index (CPI)

Answer

Federal funds rate

Answer

Producer Price Index (PPI)

Question 5

When a revenue forecast consistently overestimates actual collections over multiple periods, the analyst should first investigate:

Accepted Answer

Whether the forecasting model has systematic positive bias

Answer

Whether actuals were recorded correctly

Answer

Whether the Delphi panel size was adequate

Answer

Whether seasonality was double-counted

Question 6

The Office of Management and Budget (OMB) requires agencies to use which economic assumptions as the baseline for multi-year budget submissions?

Accepted Answer

OMB's own economic forecast

Answer

Congressional Budget Office assumptions only

Answer

Agency-developed projections

Answer

Federal Reserve's economic projections

Question 7

Which statistical concept measures the proportion of variance in revenue that is explained by the independent variables in a regression-based forecast model?

Accepted Answer

Coefficient of determination (R²)

Answer

Mean Absolute Error

Answer

Autocorrelation coefficient

Answer

Variance inflation factor