If the interest rate is expected to be 3% higher in Ireland than in the U.S:

Choose from the options below

1.the forecasted Ireland spot exchange rate should indicate depreciation by 3%.

2.the forecasted Ireland spot exchange rate should indicate appreciation by 3%.

3.the theory of purchasing power parity would predict a drop in nominal interest rates in Ireland of approximately 3%.

4. spot exchange rates between the two countries should remain unchanged over the long run.