Final answer:
Per capita income is a commonly used measure to assess the standard of living in a country. However, there are several shortcomings associated with this measure, such as not accounting for income disparities and differences in prices and cost of living. The inclusion of gray and black sectors of the economy and a large middle class can be seen as positive aspects of this measure.
Step-by-step explanation:
Per capita income is a commonly used measure to assess the standard of living in a country. However, there are several shortcomings associated with this measure. One of the shortcomings is that it monetizes transactions within a country, which means it includes all economic activity regardless of whether it benefits the actual households. Another shortcoming is that it doesn't take into account income disparities, which can lead to a misleading representation of the standard of living for different groups within a country. Additionally, per capita income doesn't provide information about how much a household can actually buy, as it doesn't account for differences in prices and cost of living.
On the other hand, the inclusion of gray and black sectors of the economy can be seen as a positive aspect of the per capita income measure, as it provides a more comprehensive view of the economy. Additionally, having a large middle class can indicate a more stable and prosperous economy. Therefore, the correct answer is e. a huge middle class.