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It refers to the increase in the country's capacity to produce the output of goods and services within the country.

Solution

Correct Option: 1

Economic growth refers to a sustained increase in a country's productive capacity, i.e. its ability to produce more goods and services over time. Modernisation relates to adoption of new technology, equity deals with fair distribution, and self-reliance means reducing dependence on external resources. The definition given -- increase in the country's capacity to produce output -- directly matches economic growth.

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