Final answer:
The vocabulary word is 'Hadith,' which refers to the life, teachings, and actions of the Prophet Muhammad, guiding Muslims in how they should live.
Step-by-step explanation:
Vocabulary Word: Hadith
The vocabulary word that matches the definition of 'the example that Muhammad’s life (words and actions) set for how Muslims should live' is the Hadith. The Hadith consists of the words and actions of the Islamic prophet Muhammad, along with his immediate successors, and, complementing the Qur'an, forms the fundamental basis for Islamic law. Muhammad's life serves as a spiritual and moral guide for Muslims, emphasizing on the importance of living in a way that adheres to the principles and teachings of Islam as exemplified by Muhammad's practice.
Additionally, the term Jihad often refers to the struggle of living in accordance with Muhammad's example and teachings. In Islam, jihad is frequently understood as the inner spiritual struggle to live a life of moral integrity in alignment with Islamic principles, something that goes beyond the often misunderstood notion of it being solely about 'holy war'.