Which of the following activities constitute the 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:

QUESTION

Medium

Economy

Prelims 2022

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

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

Select the correct answer using the code given below:

Select an option to attempt

Explanation

The real sector of the economy includes:

Farmers harvesting their crops: This is a primary sector activity where raw materials are produced. Agriculture forms a crucial part of the real sector.

Textile mills converting raw cotton into fabrics: This is a secondary sector activity where raw materials are processed into finished goods. Manufacturing industries are considered part of the real sector.

The other two options are part of the financial sector:

Commercial bank lending money (Financial sector): Banks and other financial institutions provide financial services like lending, borrowing, and investing. These activities facilitate transactions in the real sector but don't directly produce goods or services themselves.

Issuing rupee-denominated bonds overseas (Financial sector): This is a financial instrument where a company raises funds by issuing bonds. While it can indirectly support real sector activities by providing capital, it's not directly involved in production.

Therefore, the correct code is 1 and 2 only.

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