Rate of return parity is another name for purchasing power parity.

Question

Quizplus · Accepted Answer

Rate of return parity and purchasing power parity are two different concepts. Rate of return parity refers to the phenomenon where the return on an investment in one currency is equal to the return on an investment in another currency, after accounting for exchange rate differences. Purchasing power parity refers to the idea that the cost of living in one country should be equal to the cost of living in another country, once exchange rates are taken into consideration.

Rate of Return Parity Is Another Name for Purchasing Power