Final answer:
Systems testing runs a subset of the system in the actual production environment to validate its functionality, inter-operability, and performance. It differs from unit and integration testing, which test components in isolation or in combination, respectively.
Step-by-step explanation:
The correct answer to the question 'The ____ runs a subset of the system in the actual production environment' is C. systems test. Systems testing is the phase in the software development life cycle where the complete and integrated software product is tested in an environment that closely replicates the actual production environment. The goal is to validate the software's functionality, inter-operability with other components, and overall performance.
A unit test (A) refers to testing individual components or 'units' of code for correctness, typically done by developers. An integration test (B) involves combining individual units of code and testing them as a group to discover interface defects between units. An operations test (D) could refer to testing in the operational maintenance phase, though it is not a standard term in software testing.