Question
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
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%. Compile the 2017 GDP for the country of Digiland using the expenditure product, and income approaches.
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1 Expenditure Method We know that based on Expenditure Method of calculating the GDP GDPCIGNX where C Overall consumption expenditure of the country IOverall business investment in the country G Total ...Get Instant Access to Expert-Tailored Solutions
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