Question $1$

If the interest rate in the U$.$S$.$ is i $$=5$ percent for the next year and interest rate in the U$.$K$.$

is i$=8$ percent for the next year, IRP suggests that

A$.$ the pound is expected to depreciate against the dollar by about $3$ percent.

B$.$ the pound is expected to appreciate against the dollar by about $3$ percent.

C$.$ the dollar is expected to appreciate against the pound by about $3$ percent.

D$.$ both a$)$ and c$)$