Equilibrium level' of income is the level of income/output where the Aggregate Demand is equal to Aggregate Supply in an economy, i.e. AD = AS. In other words, when desired output/income equals to desired expenditure, equilibrium output is struck.
There can be unemployment even if the economy is at equilibrium at AS = AD corresponding to the situation of less than full employment. In the diagram, AD is the . Aggregate Demand corresponding to-full employment level at F. However, AD, refers to under full employment equilibrium of point Q. At this point, even at the point of equilibrium,, the economy may face the problem of unemployment.