By choosing William Jennings Bryan as their candidate in 1896, the Democrats...
A. were showing they were finally going to be like the Republicans.
B. showing they had changed in the direction of the Populists.
C. had decided to change back to leadership of Big Business
D. were showing all the above to the American voter.
To answer this question, one has to know both about Bryan and the Populism movement. Bryan, a Kansan, represented people who lived in small towns and rural areas. The Populist movement of the late 1800s was an attempt to make government more responsive to the public's needs through reforms and regulations on big businesses.
The main issue in the 1896 election was whether or not to introduce the free coinage of silver. This would have put more money into the economic system, promoted inflation, and made it easier for farmers to borrow money. The Republicans were against this as it would have given their gold stocks less value. The answer to your question is choice "B" as the free coinage of silver had been a position that populists had taken in the 1888 and 1892 presidential elections. The Democrats in 1896 even used the Populist candidate Tom Watson as Bryan's running mate. All the other choices in your question describe the Republicans of the period.
As with all multiple choice questions, referencing what is being studied in class is going to be essential. There is a specific answer being sought and it's probably sought based on what has been done in terms of instruction. With that in mind, I would say that the nomination of William Jennings Bryan in the Presidential Election of 1896 helps to underscore the rift between big business and those who were not located in the upper echelons of the economic structure. To borrow a bromide from the modern lexicon, it was a collision between the "1% and the 99%." Bryan, undoubtedly, stood for the latter. In this light, I think that some of the options can be eliminated. In choosing Bryan to lead their ticket, the Democrats made a stark change from their Republican counterparts. The Republican McKinley was seen as a steward of business, which means that letters A, C, and D are out as these three have something to do with the Democrats aligning themselves with Big Business. Given Bryan's passion and position against this, the logical answer is "B," in that Bryan led the Democrats much closer to the notion of Populism more than anything else, and certainly more than a movement towards Big Business.