12) Today's spot rate between the euro and dollar is 1.0927/$. The annual inflation rate in the U.S is expected to be 2.73 percent and the annual inflation rate in euroland is expected to be 2.23 percent. Assuming relative purchasing power parity holds, what will the exchange rate be in two years?

Multiple Choice 1.0818/$ 1.0982/$ 1.1037/$ 1.0872/$ 1.0764/$