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3. Answer the following separate questions about uncovered interest parity (10 points) a. Suppose the U.S. dollar interest rate is 3%, while the interest rate in the United Kingdom is 6%. Your friend thinks he can convert his dollars, invest in the United Kingdom and convert his pounds back into dollars at the end of a year, allowing him to make a lot higher return. Assuming uncovered interest parity (UIP), explain why he is incorrect b. Suppose interest rates in the United States are 5.5%, while they are 3% in the euro area. Currently the dollar-euro exchange rate is at $2.50 per euro. If UIP holds, what do you expect the exchange rate to be in the future? Round to three decimals