1. Suppose the government grants $2,500 per child to households that have more than two children. Do these child allowances influence the fertility behavior of households that had no children prior to the government program?
2. A worker plans to retire at the age of 65 when he will start collecting his retirement benefits. There is a sudden change in inflation forecasting, and inflation is predicted to be higher than had been expected. Prices and wages are now expected to go up. What effect will this announcement have on the person's retirement age preference:
a. If his retirement benefits were fully adjusted for inflation?
b. If the retirement benefits were not fully adjusted for inflation?