Full employment, in context of determination of income, implies?

Absence of involuntary unemployment.

The correct answer is Option (2) → Absence of involuntary unemployment.

In the context of income and employment determination, full employment does not mean that everyone in the economy is employed. It means that all those who are willing and able to work at the prevailing wage rate are employed — i.e., there is no involuntary unemployment.

Full employment implies that any remaining unemployment is voluntary (people choosing not to work at the prevailing wage) or due to frictional (short-term, between jobs) and structural (mismatch of skills/location) factors, which together constitute the Natural Rate of Unemployment. When the economy is at full employment, it is producing its potential output.