Which measure is commonly used to determine the poverty line in various countries?

Correct option is D

The correct answer is (d) Purchasing Power Parity (PPP)

Explanation:
• Purchasing Power Parity (PPP) is an economic theory used as a measure to compare the standards of living and economic well-being between different countries.
• It compares the relative value of a unit of currency to another by measuring how much of a "basket of goods" can be bought with each currency.
• By adjusting for differences in the cost of living, PPP provides a more accurate assessment of an individual's real income and ability to afford necessities, making it a common metric for determining the poverty line on a comparable global scale (e.g., the World Bank's international poverty line is set at $2.15/day in 2017 PPP).

Information Booster:
• The "Big Mac Index" is a famous informal application of PPP to compare currency values globally.

Additional Knowledge:
(a) Median income .:
• Median income is used internally within countries to measure income distribution, but less effective for international comparisons due to fluctuating exchange rates and cost of living differences.

(b) Consumer Price Index (CPI) .:
• CPI measures inflation or the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services, not a direct measure for comparing global poverty lines.

(c) Gross Domestic Product (GDP) per capita .:
• GDP per capita measures average economic output per person, but doesn't account for cost of living differences across countries as effectively as PPP.