The correct option is III, I AND II.
The first sentence is a quotation, the second sentences is a paraphrase while the third statement is an attribution. A quotation refers to direct importation of the words said by another person, such words are usually placed inside quotation marks.
I believe it is Subjunctive.
I’m pretty sure this answer is the letter A.
But I’m pretty sure that that’s not correct but I remember taking this test and answering it like that