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4. Suppose the government grants $2500 per child to households that have more than 2 children....

4. Suppose the government grants $2500 per child to households that have more than 2 children. How would this affect fertility?

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When government grants $2500 per child to households that have more than two children, the fertility rate increases. Government takes steps to increase the fertility by providing such incentives. These incentives avoids fertility reductions and improves the health and welfare of parents as well as children. It reduces abortion among pregnant women. This incentive attracts many parents as the financial burden per child reduces. This will improve the overall standard of living.

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