Question

In January 2017, the Congressional Budget Office (CBO) noted that its “estimate of the deficit for 2017 has decreased since August 2016.” The CBO also noted that its “economic forecast underlies its budget projections.”

Why would the CBO’s forecast of future levels of GDP and employment matter for its forecasts of future federal budget deficits?

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For this exercise, we are going to discuss the importance of the Congressional Budget Office (CBO) estimations.

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