Question

What is the primary way in which economists measure standards of living?

Short answer

GDP per capita is one of the most important tool which is used by economists to measure the standard of living.

Step-by-step solution

Step 1. Meaning of standard of living.

The term 'standard of living' in economics refers to the quality of material goods and services available to a given population. This term basically focuses on basic material factors such as income, GDP, life expectancy and economic opportunity.

Primary ways to measure standard of living.

GDP per capita - This is a nations gross domestic product divided by its population.

Real GDP per capita- It removes the effect of inflation or price increases. Real GDP is a better measure of the standard of living than normal GDP.

Examples of standard of living.

United nation's Human development index, which scores 189 countries based on factors including life expectancy at birth, education, and income per capita.