The value of acceleration due to gravity is
g1=GMR21............(1)
When radius gets shrink by 2% then, new radius becomes, R2=98% = 0.98, then value of acceleration due to gravity is
g2=GMR22=GM0.98R1..........(2)
Taking ratio of equations (1) and (2)
g1g2=(R2R1)2=(0.98R1R1)2=0.9604
g1g2=0.9604
g2=1.04g1
Hence, g increases by 4%.