The correct option is 2 and 3 only.
Explanation
In macroeconomics, the economy is divided into four main sectors or economic agents: Households, Firms, Government, and the External Sector. The Household Sector is characterized by its dual role as the consumer of goods and services and the owner of factors of production.
Statement 1 is Incorrect:
While households are the primary consumption units, this statement is incorrect for two reasons. First, a household is defined as a single individual or a group of individuals (such as a family) who take economic decisions jointly; it does not consist "only" of individuals. Second, households do not take decisions relating only to consumption; they also make critical decisions regarding savings and the supply of labor (factor supply) to firms and the government.
Statement 2 is Correct:
Households are the primary demand-side agents in an economy. They purchase final goods and services produced by firms for the satisfaction of their wants (consumption expenditure).
Statement 3 is Correct:
Households are the owners of the factors of production (land, labor, capital, and entrepreneurship). They earn income by supplying these factors to firms and government departments. This income takes the form of wages, salaries, rent, interest, and profits (including income from owning firms).
Key Takeaway:
The Household Sector performs two primary functions in a circular flow of income: it consumes final goods and services and supplies factors of production to earn factor income.