Macroeconomics 1st Edition by Dean Karlan,Jonathan Morduch

Exercise 11

Cookie Monster has decided to channel his love of cookies into a new business, "Me Want Cookies Inc.," a new partnership he has formed with Miss Piggy. They are considering different countries in which to start their venture and would like to rank the countries based on the inflationary environment. They decide to give a country 10 "menu-cost" points for each percent of actual inflation in the last year, since inflation will cause their menu costs to increase. They also dislike unstable inflation, so they will give a country 20 "uncertainty" points for each percent difference in the actual inflation rate when compared to the projected inflation rate. Countries with the least total points will receive the highest rankings. Complete Table 15P-2 for Cookie Monster.