A confederation is the union of various states that unite for a specific purpose and delegate the powder to a central government. Confederations are often created in critical situations to make faster decisions intergovernmental.
For example, in America, the original 13 states signed the "<em>Articles of Confederation</em>" which are considered the first constitution of the republic, it was created to unite the 13 states and claim independence from England.
Well the term theocracy means a system of government where priests rule in the name of god, so your answer would be the second. Priests were part of the ruling class.
