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

Each period's forecast error compounds on previous errors, so uncertainty intervals widen progressively as predictions extend further into the future.

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

MAPE expresses average forecast error as a percentage of actual values, so 8% means the forecast differed from actuals by 8% of each actual revenue figure on average.

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

Probabilistic scenario weighting assigns likelihood percentages to optimistic, baseline, and pessimistic scenarios, then computes a weighted-average revenue estimate.

Question 4

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

Accepted Answer

Personal income and wages

Answer

Personal income and wages directly determine the taxable income base from which individual income tax revenues are derived.

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

Persistent over-forecasting suggests systematic positive bias in the model's assumptions or structure, which must be identified and corrected to improve accuracy.

(CBA) Certified Budget Analyst Practice Test

(CBA) Certified Budget Analyst Practice Test

CBA Forecasting & Revenue Estimation 2