$11.$ Suppose that the current exchange rate between the dollar and the euro is $$1\mathrm{.}42=$

$1($i$.$e$.,e_0=$$$1\mathrm{.}42)$ and the price per gallon of gas in the Euro zone is $1.$

Assume that the inflation rate is expected to be $10$ percent in the U$.$S$.$ and $15$

percent in the euro zone for the coming year. Assume that these inflation rates

will be the only factors that affect the exchange rate between the dollar and

the euro over the year. Further assume that there is no transaction cost.

If at the end of the year, you have $$3,$ how many gallon of gas can you buy in the

Euro zone?

Select one:

a$.1\mathrm{.}336$ gallons

b$.1\mathrm{.}921$ gallons

c$.1\mathrm{.}661$ gallons

d$.2\mathrm{.}422$ gallons