ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Answer: False. Equilibrium below the full employment level leads to deflation, which causes low level of investment and employment implies low level of output.

Detailed explanation-2: -Underemployment equilibrium describes a state in an economy where unemployment is persistently higher than usual. In this state, the economy has reached a point of macroeconomic equilibrium somewhere below full potential output, which results in sustained unemployment.

Detailed explanation-3: -Underemployment is a social problem that affects job growth, business growth, poverty levels, and the emotional and psychological health of the underemployed.

Detailed explanation-4: -Understanding Below Full Employment Equilibrium When an economy is currently below its long-run, full-employment real GDP level, there will be economic unemployment of resources, which will lead to an economic recession.

Detailed explanation-5: -According to Keynes, the equilibrium level of income is always determined corresponding to full employment level.