If the Interest Rate in the U

Multiple Choice

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, uncovered 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