QUESTION1: Nettel and Cabell are two firms located in the country of Digiland.

In 2017, Nettel won a contract with

the government of Digiland to build a free Wifi service system which was worth 8.5 million USD. To complete this
project, Nettel spent 2.5 million USD to buy the cable from Cabell, and employed 125 workers from Digiland, which it
paid the annual wages and salaries of $ 20,000 per person. Nettel also employed 50 manual workers from the
neighboring country of Agriland, to whom it paid a compensation package of $10,000 per person. Nettel paid 2.5
million USD in dividends, 0.5 million USD in taxes, and invested in a new internet service center using the equipment
produced by Nettel itself in 2017, which cost 0.5 million USD. In 2017, Nettel also made a 2.5 million USD profit from
operating an internet firm in Agriland. However, it did not remit the income to Digiland. At the beginning of 2017,
Cabell had 2 million USD of cable in inventory. During the year, it imported 4 million USD of copper from Agriland,
employed 250 workers from Digiland and 250 workers from Agriland, to all of whom it paid a package of $8,000 per
year. It exported 2 million USD of cable to Agriland, and sold 5 million USD of cables and home equipment to the
residents of Digiland. At the end of 2017, Cabell had 3.5 million USD of cable in its inventory. Besides paying 1.5
million in taxes, Cabell paid all of the remaining profit to its owners in the forms of dividends. Labor income taxes in
Digiland is 10%, and capital income taxes are 5%.

A) Compile the 2017 GDP for the country of Digiland using the expenditure product, and income approaches. Show
your work.
B) Compile the GNP for Digiland in 2017. Show your work.
C) Explain the implication of the statement “Good measurement is the prelude to sensible analysis”.
D) Goverments and organizations have spent a substantial amount of money on finding alternative measures of well
being instead of GDP. What are the limitation of these alternative measures in comparision with GDP as a measures
of standard of living?