Question

In case of an under-employment equilibrium, which of the following alternatives is not true?

Options

• Aggregate Demand is equal to Aggregate Supply.

• There exists excess production capacity in the economy.

• Resources are not fully and efficiently utilised.

• Resources are fully and efficiently utilised.

Answer 1

Resources are fully and efficiently utilised.

Explanation:

Underemployment equilibrium occurs when aggregate demand equals aggregate supply at a rate less than full employment.