Answer:
4. Literature should portray reality.
Step-by-step explanation:
Spoon River Anthology is a collection of short free-verse poems written by Edgar Lee Masters. These poems tell about the lives of the residents of Spoon River, a fictional small town.
The author of the passage you were given is saying that literature should portray reality. They state that that Masters' characterization of businessmen fails because it is not realistic. Based on that, we can conclude that they believe that it would be better if it were more realistic. That doesn't mean that Masters' books can't be considered literature or that the businessmen are not interesting. Besides that, they don't mention historical events, which makes the third statement incorrect as well.
This is why the fourth option is the correct one.