The abbreviation that tells how the italicized noun clause is used is DO. The fourth option is correct.
The clause: "that young people will respond to a challenge" is a direct object. This clause cames right after the verb believe which is a transitive verb which requires a direct object to conve a compkete thought that makes sense.
The direc object is a noun phrase denoting a person or thing that is the recipient of the action of a transitive verb