What does the magnetic compass use to indicate direction?

1. 1A gyro rotor that stays aligned with true north
2. 2The difference between pitot and static pressure
3. 3A magnet that aligns with Earth's magnetic flux lines
4. 4A radio signal from a navigation station on the ground

Source: Pilot's Handbook of Aeronautical Knowledge (FAA-H-8083-25C), Chapter 8: Flight Instruments — Compass Systems, page 225