The U.S. poverty line is calculated by multiplying the cost of food under the economy food plan by what number?

• A. 2
• B. 3
• C. 4
• D. 5

Answer: (B)

The main idea is how the official poverty line is built from the cost of food. Historically, the poverty threshold was derived by taking the cost of the economy food plan—the cheapest USDA diet plan—and multiplying that figure by three. That multiplier comes from the assumption that food costs make up about a third of a family’s total expenditures, so three times the minimal food cost provides an estimate of the total basic living expenses needed. This threshold is then adjusted for family size and inflation over time to create the current poverty line. So, the multiplier used is three. Lower or higher multipliers would misestimate the share of costs that food represents and thus understate or overstate poverty.