Which of the following is true for an earth wire? 

The Correct answer is option 2):(Only fault current flows)

Concept:

• Earth wire is directly connected to the ground. They always have zero potential
• The earth wire protects us from an electric shock and bypasses excessive current to the ground in case of a short circuit. It protects from electric chokes 
• Earth wire provide a path for leakage to flow from the device body to the ground. Neutral wire always carries a return current in normal conditions in the AC circuit. Earth wire does not carry any electric current under normal conditions, it carries current only when there is a fault in the device.
• When a fault or short circuit occurs the fault current flows through the earth wire.Hence option 2 is correct