3. Consider the following long run monetary model of exchange rates: PUKI = EE/S,+ PUS,t (5) MUK,t Must = exp( -mivK.() YUK., = exp(-mus)Yus,t (6) PUKt Pus,t WUK = ius +er/81 - eE/ s,t (7 ) CE/S,t (mukt - must + yost - yuk,) + (8 ) 1 +n 1 +n where MUKt. Must. Yost, You. are given, time is discrete and runs from period t = 0 onwards, and 7, ivs > 0 are known constants. (a) Suppose must = yost = yuk, = 0 for all t and myka = myka-1+ 6 for all t > 0, with 5 > 0 and myko = m > 0. Solve for the fundamental exchange rate. Is there a solution for all 5 > 0? [10% ] (b) Find the values of ers, myx and ix in periods 0 to 3 when m = 1, 6 = 0.50, n =2, and ivs = 0.1. Comment on the results. [10%]