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 :
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Answer: A. The real sector is the part of the economy that produces goods and services. Statement 1 (farmers harvesting) and statement 2 (textile mills making fabric) are real production. Statement 3 (bank lending) and statement 4 (issuing Masala bonds overseas) are financial sector activities that move money, not goods. So 1 and 2 only.
Watch for: Lending and bond issues help the real economy, which tempts students to include them, but they belong to the financial sector.
Why the other options are wrong
- B. Wrong because bank lending and bond issue are financial sector activities.
- C. Wrong because items 3 and 4 are financial, and item 2 is missing.
- D. Wrong because items 3 and 4 are financial sector activities.
Source to check: RBI Annual Report and Economic Survey usage of 'real sector' vs 'financial sector'; NCERT Class 12 Macroeconomics, Chapter 1
Answer from the official UPSC key. Written and fact-checked by AI against the official key. Spotted a mistake? Report it.