The exercise was an isolated island, so giving them USD wouldn't do them any good because they are isolated from other places that will give them goods and services for USD. Give everyone of them $1 million in their local currency and it is obvious this will not benefit them. Let's assume they aren't isolated. Giving them USD will certainly benefit them as they can exchange it for goods and services. Has this action increased the level of goods and services in the world economy? Of course not! You have conferred a benefit to the residents of Isolated Island, however everyone else in the economy will suffer a decrease in their purchasing power thanks to the effect of increasing the supply of money. There is no wealth created by increasing the supply of money. Does it matter whether they printed the money themselves, or that the US government did it and gave it to them. Of course not, because it doesn't matter who does the printing, the effect is the same.
You seem to be saying that a country printing more money will increase the wealth in that country, but not in the world overall?