The first table displays Congressional Budget Office forecasts made in January 2015 of future federal budget deficits. Comparethese forecasts with actual deficits for those same years (see the second table), and then answer the questions.2015201620172018 2019 2020Year:Deficit forecast (in billions ofdollars)Fiscal Budget Balance CyclicalYear201520162017201820192020E-439-585-468-467-489-540-652-739-665-779-984-1,074Component +StructuralComponent-86-76-53115387a. From 2015-2020, in how many years was the CBO too optimistic (underestimating the deficit)?-353.-509-612-790-1,037-1,161b. During this same period, in how many years was the CBO too pessimistic?c. In which year the the CBO miss their estimate by the largest amount?d. How much was added to the national debt from 2015 through 2020? $trillione. During the same years, how much was the national debt increased from the cyclical component? $billion.

Note: Since you have posted a question with multiple sub parts, we will provide the solution only…

a. From 2015-2020, in how many years was the CBO too optimistic (underestimating the deficit)? b. During this same period, in how many years was the CBO too pessimistic? c. In which year the the CBO miss their estimate by the largest amount?

a. From 2015-2020, in how many years was the CBO too optimistic (underestimating the deficit)? b. During this same period, in how many years was the CBO too pessimistic? c. In which year the the CBO miss their estimate by the largest amount?

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter11: Fiscal Policy

Section: Chapter Questions

Problem 2.10P

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Question

The first table displays Congressional Budget Office forecasts made in January 2015 of future federal budget deficits. Compare
these forecasts with actual deficits for those same years (see the second table), and then answer the questions.
2015201620172018 2019 2020
Year:
Deficit forecast (in billions of
dollars)
Fiscal Budget Balance Cyclical
Year
2015
2016
2017
2018
2019
2020
E
-439
-585
-468-467-489-540-652-739
-665
-779
-984
-1,074
Component +
Structural
Component
-86
-76
-53
11
53
87
a. From 2015-2020, in how many years was the CBO too optimistic (underestimating the deficit)?
-353.
-509
-612
-790
-1,037
-1,161
b. During this same period, in how many years was the CBO too pessimistic?
c. In which year the the CBO miss their estimate by the largest amount?
d. How much was added to the national debt from 2015 through 2020? $
trillion
e. During the same years, how much was the national debt increased from the cyclical component? $
billion.

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Step 2: Part A - CBO Deficit Projections - Assessing Optimism from 2015 to 2020:

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Step 4: Part C-CBO Deficit Projections-Identifying the Largest Deviation from Estimates between 2015 & 2020:

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