Which of the following is a measure of economic development that allows for a direct comparison of living standards in different countries?A) Gross national incomeB) Gross domestic productC) Cash reserve ratioD) Purchasing power parityE) Return on investment

Purchasing Power Parity (PPP) is the economic theory based on valuation & comparison of price of a commodity basket in different countries . It facilitates analysing countries' currencies purchasing power in other foreign countries.

Because of this purchasing power adjustment with regards to global level , it becomes a measure of economic development allowing living standards comparison in different countries.

Return on Investment & Cash Reserve Ratio are completely unrelated to the question . GDP & GNI : being total value of goods and services produced by an economy - are representative of country's living standards, but in absolute terms & not in relative comparison to different countries.

For that also, they will have to be transformed into foreign currency based on PPP exchange rate. PPP exchange rate is an exchange rate which enables a commodity basket to cost same in each country. It is evident from the fact that various national incomes are converted into GDP(PPP), based on Local currency to international reserve currency $ PPP exchange rate

So , Purchasing Power Parity (PPP) is an indispensable part of measuring economic development that allows for a direct comparison of living standards in different countries