Final answer:
The Nordic archipelago north of Scotland governed by Denmark and known as "the sheep islands" in Old Norse is the Faroe Islands. The correct answer is 2.
Step-by-step explanation:
The small Nordic archipelago located north of Scotland, which is part of Denmark and whose name in Old Norse means "the sheep islands," is the Faroe Islands. Greenland, while also being part of Denmark, is not the correct answer as it is the world's largest island and located next to Canada. The Vikings played a significant role in the colonization of both places. However, the Greenlanders have a greater degree of autonomy and are not part of the EU, primarily due to differences over fishing rules, which is a significant part of their economy along with minerals, diamonds, and gold. The correct answer is 2.