What is Meant by Underemployment Equilibrium?

Question

What is the Definition of Underemployment Equilibrium?

Answer 1

Underemployment Equilibrium refers to that situation in the economy when AS = AD (or S = I) but without fuller utilisation of resources. Accordingly, there is unutilised capacity or excess capacity in the economy even in a state of Equilibrium. All those who are willing to work (and able to work) at the existing wage rate are not getting work.