Which of the following activities constitute real sector in the economy?

  1. Farmers harvesting their crops
  2. Textile mills converting raw cotton into fabrics
  3. A commercial bank lending money to a trading company
  4. A corporate body issuing Rupee Denominated Bonds overseas

Select the correct answer using the code given below:

  1. 1 and 2 only
  2. 2, 3 and 4 only
  3. 1, 3 and 4 only
  4. 1, 2 3 and 4

Explanation:

The real sector in the economy refers to the part of the economy that is involved in the production and consumption of goods and services. It encompasses key economic segments that contribute to the growth of GDP. Among the given activities, the following constitute the real sector in the economy:

  • Farmers harvesting their crops: This is an agricultural activity and is part of the real sector as it involves the production of food products.
  • Textile mills converting raw cotton into fabrics: This is a manufacturing activity and is also part of the real sector as it involves the production of goods.

The other two activities mentioned are part of the financial sector and not the real sector:

  • A commercial bank lending money to a trading company
  • A corporate body issuing Rupee Denominated Bonds overseas

Therefore, the correct answer is 1 and 2 only.

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