Option 1: Deficient Demand -> When output equilibrium is less than the full employment level, it indicates that the aggregate demand in the economy is insufficient to support full employment. This situation is known as Deficient Demand or Deflationary Gap. It results in unemployment, underutilization of resources, and production below the economy's potential. To correct this, expansionary fiscal or monetary policies are typically implemented to boost aggregate demand and move the economy toward full employment equilibrium. -> correct