American Institute of Certified Planners (AICP) Practice Exam

What does Area Median Income (AMI) refer to?

1. The highest income in a particular area

2. The average income for a particular community

3. The middle or midpoint income for a particular area

4. The total income of households in a region

The correct answer is: The middle or midpoint income for a particular area

Area Median Income (AMI) is defined as the middle or midpoint income for a particular area. This measure is used to determine the income level that divides the income distribution into two equal groups: half of the households earn more than the AMI, while half earn less. AMI is an important benchmark for assessing the economic status of a community and is often utilized in various planning and housing programs to establish eligibility for affordable housing, as well as to inform policymakers about the economic conditions within an area. The concept of AMI allows planners and developers to better understand economic disparities and tailor housing and financial assistance programs to meet the needs of the community. It is more informative than merely referencing the average income, as averages can be skewed by extremely high or low incomes. Thus, AMI serves as a more stable indicator of a community's overall economic health and housing affordability.