American Institute of Certified Planners (AICP) Practice Exam

How are low income households characterized in terms of Area Median Income?

1. Earn between 30-50% of Area Median Income

2. Earn between 50-80% of Area Median Income

3. Earn between 80-120% of Area Median Income

4. Earn above 80% of Area Median Income

The correct answer is: Earn between 50-80% of Area Median Income

Low-income households are typically characterized as those earning between 30% and 50% of the Area Median Income (AMI). This classification aligns with federal housing guidelines, particularly those established by the U.S. Department of Housing and Urban Development (HUD), which define low-income as households that earn less than 80% of the AMI. However, when we examine the income bands, the segment that is generally recognized as "very low income" falls within the 30% to 50% range, while low income is often described as households earning up to 80% of AMI. The option presented that indicates earnings between 50-80% of AMI represents the broader low-income category, including those who have incomes at the upper end of that range. While the choice selected points to 50-80%, it is important to remember that the distinction between these bands is crucial for various housing assistance programs and funding allocations. By understanding these definitions, planners can better comprehend the demographic and socioeconomic needs of specific areas, which is essential for effective community planning and resource allocation.