INSTRUCTOR DISCUSSION NOTES:
How Much Will the Iraq War Cost the Iraqis?

1. Why do you think foreign aid was subtracted from the researcher's calculation of the cost of the war, if Iraq was receiving all of that aid over this period?

If a country was receiving foreign aid, then including the aid in the calculation would have overstated the true performance of that country by itself. To isolate the Iraqi economy itself, the foreign aid had to be removed.

2. Why do you think that the costs to the U.S. and the costs to Iraq vary so widely if we are talking about an identical event?

The war is on Iraq's land, and therefore that country bears a greater share of the burden. The U.S. has a much larger economy, so even if it is spending (or losing) more in nominal terms, as a percentage of U.S. GDP, that number will appear much smaller.

3. What kinds of benefits do you think this war has for Iraq? How would you measure those?

Answers may vary.

Multiple Choice/True False Questions

1. The loss in value to the Iraqi economy can best be described as a(n)
  1. Variable cost
  2. Fixed cost
  3. Sunk cost
  4. Opportunity cost
ANS . d

2. What does the war in Iraq do to the location of its production possibility frontier?
  1. Shift it out
  2. Shift it inward
  3. It doesn't move; the economy simply moves along the curve
  4. It doesn't move; the economy simply moves to a point below the curve
ANS . b

3. True/False. This study implies that Iraq is worse off in the long run because of the war.

ANS . False. (need to consider potential future benefits here, possible increased future growth rates)[But not enough information in the article for students to make an informed answer…..a misleading question as it now stands. Can you go back and note some of the possible long-term benefits of the war to the Iraqis? Then it's fair game.]

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