The indices used to measure the cost of living is

Analyze the question: The question asks which index is used to measure the cost of living, meaning how much it costs to buy the goods and services people typically consume.

Explain the concept: The cost of living is tracked by looking at changes in the prices of a representative "basket" of goods and services (food, rent, transport, clothing, and so on) over time. The tool for this is the price index. In Nigeria, the best-known example is the Consumer Price Index (CPI), which is published by the National Bureau of Statistics (NBS). A rising CPI means the cost of living is rising (inflation), and a falling CPI means it is falling (deflation).

Step-by-step solution:

1. Consumption expenditure is the total amount spent on goods and services. It shows spending levels, not changes in prices. ❌
2. National income measures the total income earned by a country's residents and shows the size of the economy, not the cost of living. ❌
3. Per capita income is national income divided by population. It shows the average income per person, which measures living standards, not prices. ❌
4. Price index tracks changes in the prices of a basket of goods and services over time. This is exactly how the cost of living is measured. ✅
5. Savings and investment relate to how income is used and have nothing to do with measuring prices. ❌

Answer: The correct option is D. price index.

Exam tip: Whenever you see "cost of living," "inflation," or "changes in the general price level," think price index (CPI). Remember: Cost of living = Price index. Per capita income tells you how much people earn, while the price index tells you how much things cost.