Final answer:
The term 'standard of living' refers to the overall material well-being determined by the ability to purchase goods and services, which is influenced by income and other quality-of-life factors.
Step-by-step explanation:
The term standard of living refers to the material well-being that can be measured by the quality of goods and services that may be purchased by the per capita national income. This concept is a broader term than gross domestic product (GDP), which focuses on production bought and sold in markets, as the standard of living includes all elements that affect a person's well-being, not just market transactions.
While no single number can fully encapsulate the standard of living, GDP per capita is considered a reasonable, rough-and-ready measure of it. The standard of living is influenced by various factors such as income, employment, class, literacy rates, mortality rates, poverty rates, and housing affordability. A high standard of living is often associated with a quality of life where residents have the ability to afford homes, own cars, and enjoy vacations.