Q. 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:
a) 1 and 2 only
b) 2, 3 and 4 only
c) 1, 3 and 4 only
d) 1, 2, 3 and 4
Correct Answer: a) 1 and 2 only
Question from UPSC Prelims 2022 GS Paper
Explanation :
Real Sector of the Economy
The real sector of the economy is integral to economic development and growth. It encompasses the production of goods and services, involving the actual physical creation of commodities. This sector utilizes natural resources, labor, and capital to meet human wants and needs. Key activities within the real sector include agriculture, manufacturing, construction, and mining.
Real Sector Activities
1. Farmers harvesting their crops – This activity falls under the agricultural sector, a vital part of the real sector, focusing on food production and raw materials.
2. Textile mills converting raw cotton into fabrics – This manufacturing process is a transformation of raw materials into finished goods, representing another essential aspect of the real sector.
Non-Real Sector Activities
3. A commercial bank lending money to a trading company – This is a financial sector activity, which deals with financial services rather than the production of goods.
4. A corporate body issuing Rupee Denominated Bonds overseas – Similar to banking, this is a financial activity aimed at raising capital in the financial markets, not producing goods or services.
In summary, the activities that are part of the real sector in the economy from the provided options are:
- Farmers harvesting their crops
- Textile mills converting raw cotton into fabrics
The correct answer is “1 and 2 only.”.
