Which of the following activities constitute real sector in the economy?1.Farmers harvesting their crops2.Textile mills converting raw cotton into fabrics3.A commercial bank lending money to a trading company4.A corporate body issuing Rupee Denominated Bonds overseasSelect the correct answer using the code given below:

1. A

   1 and 2 only

   1 and 2 only. Harvesting and spinning cotton into cloth are real-sector production. Bank lending and masala bonds are financial.

2. B

   2, 3 and 4 only

   2, 3 and 4 only. 3 and 4 are finance, not the real sector.

3. C

   1, 3 and 4 only

   1, 3 and 4 only. Drops mills and keeps finance.

4. D

   1, 2, 3 and 4

   All four. Money-lending and overseas INR bonds are not real-sector output.

Summary. Official key is (a) 1 and 2 only. The real sector is goods and non-financial services — farms and textile mills. A bank loan and a rupee-denominated overseas bond are financial-sector flows.