1. Among the various forms of unemployment, disguised unemployment is very challenging to the policymakers and it is also a big threat to the business and economic environment. Explain the reasons. Also, explain the ways in which this threat could be minimized.

2. Assume that the macroeconomy is in deep contraction and the government is considering designing an expansionary fiscal policy. The government is planning to choose one of the following two: a) a 25 % rise in the capital expenditure with not much changes in revenue expenditure

b) a 25 % rise in revenue expenditure with not much changes in capital expenditure. Explain the sequential impact of each of these policy options on the economy and justify which policy option among the two appear to be more prudent and will effectively address the slowdown?