Step 1: Understand Rusting of Iron.
Rusting is the process of corrosion of iron or steel due to the reaction with oxygen and water. The chemical reaction involved in rusting can be summarized as:
$$
4 \text{Fe} + 3 \text{O}_2 + 6 \text{H}_2\text{O} \rightarrow 4 \text{Fe}_2\text{O}_3 \cdot n\text{H}_2\text{O}.
$$
This equation shows that both oxygen (from air) and water are essential for the rusting process. Without either of these components, rusting cannot occur.
Step 2: Analyze Each Option.
Option (1): 'air' — Incorrect, as rusting requires both air (for oxygen) and water.
Option (2): $ \text{H}_2\text{O} $ — Incorrect, as rusting requires both air (for oxygen) and water.
Option (3): 'air' and 'H$_2$O' — Correct, as both air (for oxygen) and water are necessary for rusting.
Option (4): Only 'N$_2$' — Incorrect, as nitrogen ($ \text{N}_2 $) does not participate in the rusting process.
Step 3: Final Answer.
$$
(3) \mathbf{'\text{air}' \text{ and } '\text{H}_2\text{O}'}
$$