What is characterized by three generations living together or in close proximity?

The correct choice is characterized by three generations living together or in close proximity is the vertically extended family. This type of family structure includes multiple generations, typically at least grandparents, parents, and children, living together or within close range to support one another.

The concept of a vertically extended family highlights the intergenerational relationships and the sharing of resources, caregiving, and cultural transmission that occurs within this arrangement. It contrasts with other family types like the horizontally extended family, which typically refers to a structure where relatives of the same generation (such as siblings and their families) live together or near each other, thereby lacking the generational layering found in a vertically extended family.

Further, a modified extended family refers to a family structure that might still include relatives but would more commonly consist of some combination of nuclear and extended members without the direct coexistence typical of vertical extension. A lone parent family, on the other hand, consists of only one parent and their children, clearly lacking the multi-generational component necessary for the definition of a vertically extended family.