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The correct answer is option 3, which states that all three statements are correct.
Statement 1 is correct. The Morley-Minto Reforms Act, also known as the Indian Councils Act of 1909, increased the number of members of the Central Legislature in India. This was done to provide for a greater representation of Indians in the legislative process.
Statement 2 is also correct. The Act introduced the principle of communal representation, which meant that seats in the legislature were allocated based on religious communities. This was seen as a way to ensure that different religious groups had their voices represented in the legislature.
Statement 3 is correct as well. The Morley-Minto Reforms Act empowered the Legislative Councils to discuss the budget and move resolutions on it. This gave the legislative bodies the ability to have a say in the financial matters of the government.
In conclusion, the Morley-Minto Reforms Act raised the number of additional members in the Central Legislature, introduced communal representation, and empowered the Legislatures to discuss the budget and move resolutions on it. Therefore, option 3 is the correct answer.