Question

What is the first element of a revenue forecast is:

A. economic forecast

B. monthly revenue update

C. sales tax collections

D. statistical equations

Answer 1

A. economic forecast

Economic forecasting is the process of attempting to predict the future condition of the economy using a combination of important and widely followed indicators.

Economic forecasting involves the building of statistical models with inputs of several key variables, or indicators, typically in an attempt to come up with a future gross domestic product (GDP) growth rate. Primary economic indicators include inflation, interest rates, industrial production, consumer confidence, worker productivity, retail sales, and unemployment rates.

Economic forecasts are geared toward predicting quarterly or annual GDP growth rates, the top-level macro number upon which many businesses and governments base their decisions with respect to investments, hiring, spending, and other important policies that impact aggregate economic activity.