Inequality, Poverty, and Discrimination

3. The Economics of Poverty

3.9. Answer to Try It! Problem

According to the absolute income test, the Smiths are poor because their income of $20,500 falls below the 2006 poverty threshold of $20,614. According to the relative income test, they are not poor because their $20,500 income is above the upper limit of the lowest quintile, $20,035.