As far as I can tell, both B. (declaring that the U.S. State Department had been infiltrated by communists) and C. (holding hearings about communist ties to the entertainment industry) are correct.
C) Holding hearings about communist ties to the enterntainment industry.
Explanation:
The House Un-American Activities Committee (HUAC) was a federal agency tasked with trying to reveal any Soviet/communist influence within the entertainment industry. More specifically, this agency focused on the film industry. The federal government was worried about the movie industry and it's ties to the Soviet Union because of the influence that movies had on millions of American citizens on a weekly basis.
This is why the HUAC would call in important people like Walt Disney and Ronald Reagan in order to question them about their potential ties to the Soviet Union.
