5. A locality is interested in developing multiple forecasts for its revenue sources that are influenced by price and demand by adjusting economic assumptions to assess the reliability of the overall revenue projections. What type of analysis would be undertaken to satisfy this objective? a) Validity analysis b) Sensitivity analysis c) Regression analysis d) Dependent variable analysis 6. Which of the following is not an advantage of the pay-as-you-go method for financing capital projects? a) Encourages intergenerational equity b) Provides savings in interest and issuance costs c) Enhances perception of credit quality d) Preserves financial flexibility 7. In preparing the annual budget, the finance officer should consider the overall fiscal capacity of the entity. Fiscal capacity is: a) the ability of a jurisdiction to generate taxes and other revenues from its own sources, as well as issue debt b) the ability of a jurisdiction to generate taxes and other revenues from its own sources c) the key consideration when a jurisdiction issues debt as part of its capital improvement program d) a reflection of both the local and regional economy