A futures market trades contracts on the growth rate for nominal GDP. The contract pays $X to thebuyer, where X is 100 times the growth rate in nominal GDP from last year to this year. Forexample, if nominal GDP grows by 1% over last year, the contract pays $100 (1 x 100).Nominal GDP last year was $28,909 billion. Contracts on the futures markets are currently sellingfor $513. What is the market's prediction for nominal GDP this year?Put your answer in billions. You may round to two decimal places.

A future contract is a derivate instrument which derives it's value from an underlying asset. In…

Answered: Nominal GDP last year was $28,909…

Nominal GDP last year was $28,909 billion. Contracts on the futures markets are currently selling for $513. What is the market's prediction for nominal GDP this year?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

A futures market trades contracts on the growth rate for nominal GDP. The contract pays $X to the
buyer, where X is 100 times the growth rate in nominal GDP from last year to this year. For
example, if nominal GDP grows by 1% over last year, the contract pays $100 (1 x 100).
Nominal GDP last year was $28,909 billion. Contracts on the futures markets are currently selling
for $513. What is the market's prediction for nominal GDP this year?
Put your answer in billions. You may round to two decimal places.

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