Economy
2022
Basic Economic Terms
Which of the following activities constitute 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:
B.2, 3 and 4 only
A.1 and 2 only
C.1, 3 and 4 only
D.1, 2, 3 and 4
Correct Answer: Option A
This question tests the understanding of the difference between the real and financial sectors of an economy.
The Real Sector includes activities that directly contribute to economic output and GDP, such as farming and manufacturing.
The Financial Sector includes firms providing financial services, such as banks and insurance companies.
- Statement 1 (Correct): Farmers harvesting crops directly contribute to agricultural output, which is a part of the real sector.
- Statement 2 (Correct): Textile mills converting raw cotton into fabrics is a manufacturing activity and part of the real sector.
- Statement 3 (Incorrect): Commercial banks lending money is a financial activity.
- Statement 4 (Incorrect): Issuing Rupee Denominated Bonds overseas is a financial activity.
Therefore, only statements 1 and 2 are correct.
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