What is the difference between the Full Employment and UnderEmployment Equilibrium?

Full Employment Equilibrium and Underemployment Equilibrium are two different states in an economy, which are explained as follows:

1. Full Employment Equilibrium: This is a situation where all available labor resources are being used in the most economically efficient way. In other words, the economy is producing its maximum possible output of goods and services. In this state, there is no cyclical or deficient-demand unemployment. However, other types of unemployment, such as frictional unemployment (short-term joblessness caused by the process of matching workers with jobs) and structural unemployment (long-term joblessness that comes from a mismatch between workers' skills and the skills required for available jobs), may still exist.

2. Underemployment Equilibrium: This is a situation where the economy is stable, but there is underemployment. Underemployment refers to a situation where workers are employed less than full time or in jobs that do not utilize their skills and education. In this state, the economy is not producing at its maximum potential output. This is often due to a lack of aggregate demand, which leads to less production and therefore less need for labor.

In summary, the main difference between the two is that full employment equilibrium refers to a state where the economy is operating at its maximum potential, while underemployment equilibrium refers to a state where the economy is stable but not operating at full capacity due to underemployment.