The reaction of iron(III) oxide (Fe₂O₃) with aluminium is used to join railway tracks or cracked machine parts. What is this reaction known as? 

Thermit reaction 

The correct answer is option 3. Thermit reaction.

The reaction of iron(III) oxide $(Fe_2O_3)$ with aluminum is known as a thermite reaction.

In this highly exothermic reaction, aluminum acts as the reducing agent, reducing iron(III) oxide to produce molten iron and aluminum oxide. The reaction is typically initiated by heating the reactants to a high temperature, often using a magnesium strip or other ignition source. The intense heat generated by the reaction causes the molten iron to flow and fill gaps, making it useful for welding and joining materials such as railway tracks or cracked machine parts.

So, the correct answer is: Thermit reaction.