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diagnosis
A mental disability is diagnosed by evaluating a person's cognitive ability level, or IQ, and their adaptive functioning. If both areas indicate that the child is functioning significantly below the average level, a mental disability is diagnosed. The child should also have an educational assessment in order to provide a comprehensive assessment of their strengths and weaknesses and to aid in determining appropriate school placement and intervention.
Cognitive ability is evaluated by licensed psychologists using IQ tests. These are standardized tests, and the most commonly used test is the Wechsler Intelligence Scale for Children - III. It provides an IQ, as well as information about the child's strengths and weaknesses in terms of different areas of verbal and nonverbal problem solving skills. The test is designed to assess the child's current ability to solve problems, think abstractly, deal with new situations, and benefit from experience. The psychologist meets with the child alone, and all tasks are presented in a manner so that the child feels comfortable and is encouraged to perform at their best. In addition to evaluating the child's skills in different areas, the psychologist evaluates the child's behaviors and response to the tasks, such as their ability to attend for certain periods of time, their behavior when frustrated, and what strategies they use to solve problems.
Adaptive functioning is an assessment of a person's ability to take care of themselves, and is usually assessed by asking a parent or caretaker what the person typically does at home, using standardized questionnaires. Areas assessed for young children include basic self-care skills like feeding, dressing, and toileting, their ability to communicate their needs and wants in a familiar environment, and their social and play skills. For older children and adults, the assessment would also include their ability to function outside their home, such as the ability to follow rules in school or other community settings, understanding of money and how to travel to places they need to get to on a regular basis.
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Disabilities 
