Read the following report carefully and answer the questions on the basis of the same:

Along with the weakening of global economic activity, inflation the world over also remained muted in 2019. Inflation softened in advanced and emerging economies reflecting a slack in consumer demand. From the supply side, lower energy prices in 2019 also contributed to softening of inflation. In India, inflation rose slightly to 4.1% in April - December 2019, after a sharp decline from 5.9% in 2014 to 3.4% in 2018.

In case of an underemployment equilibrium, which of the following alternative is not true?

Resources are fully and efficiently utilised.

The correct answer is Option (4) → Resources are fully and efficiently utilised.

An underemployment equilibrium (also known as a recessionary gap or deficient demand equilibrium) is a situation where the aggregate demand in an economy is equal to aggregate supply, but this equilibrium occurs at a level of output that is below the full employment potential of the economy. This implies that some resources, particularly labor, are underutilized.

• Aggregate Demand = Aggregate Supply: In any equilibrium state, whether full employment or underemployment, aggregate demand (AD) must equal aggregate supply (AS). This is the condition for an economy to be in equilibrium, meaning there's no tendency for output or income to change. So, this statement is true even in underemployment equilibrium.

• There exist an excess production capacity in the economy: Since the economy is operating below its full employment potential, it means that existing factories, machinery, and labor are not being used to their fullest. This results in excess production capacity. So, this statement is true.

• Resources are not fully and efficiently utilised: This directly follows from the definition of underemployment equilibrium. If the economy is operating below its potential, it means available resources (like labor, capital, land) are either unemployed or underemployed. They are not being fully and efficiently put to use. So, this statement is true.

• Resources are fully and efficiently utilised: This statement describes a full employment equilibrium, where the economy is producing at its maximum potential output with all available resources being used optimally. This is the opposite of an underemployment equilibrium. Therefore, this statement is not true in the case of underemployment equilibrium.