CBA Forecasting & Revenue Estimation 3

Question 1

A 'naive' or 'no-change' forecast assumes that next period's revenue will equal:

Accepted Answer

The most recent period's actual value

Answer

A naive forecast uses the most recent observed value as the prediction for the next period, serving as a simple benchmark for evaluating more complex models.

Question 2

Which technique decomposes a revenue time series into trend, seasonal, cyclical, and irregular components?

Accepted Answer

Classical decomposition

Answer

Classical decomposition separates a time series into its trend, seasonal, cyclical, and irregular (random) components to analyze each element independently.

Question 3

When preparing revenue estimates for a proposed tax policy change, the analyst should use:

Accepted Answer

Dynamic scoring that accounts for behavioral and macroeconomic effects

Answer

Dynamic scoring models both direct revenue effects and behavioral or macroeconomic feedback effects, providing a more complete picture of a tax policy's budget impact.

Question 4

An autocorrelation in forecast residuals indicates that:

Accepted Answer

Unexplained patterns remain in the data that the model has not captured

Answer

Autocorrelated residuals signal that the model missed systematic patterns in the data, meaning model specification or structure needs improvement.

Question 5

Which of the following best describes 'revenue recognition' principles that affect when estimated revenues are recorded in a budget forecast?

Accepted Answer

Revenues are recognized when earned or received based on applicable accounting standards

Answer

Revenue recognition follows applicable standards (GAAP or GAGAS), recording revenues when earned or received, which affects the timing reflected in budget forecasts.

(CBA) Certified Budget Analyst Practice Test

(CBA) Certified Budget Analyst Practice Test

CBA Forecasting & Revenue Estimation 3