Several political leaders have proposed that parents be granted a substantially larger reduction in their annual personal income taxes for each child that they parent. According to economic thinking, what would be the result of this type of legislation?

Question

Quizplus · Accepted Answer

According to the theory of supply and demand, when the cost of a good or service is reduced, the quantity demanded increases. Therefore, if the after-tax cost of raising children is reduced through this legislation, it is likely that more people would choose to have children, leading to an increase in the birth rate.

Several Political Leaders Have Proposed That Parents Be Granted a Substantially