The correct answer is option 1: I, II, and III.

Earthquakes are commonly caused by the movement along faults, which are fractures in the Earth`s crust. Option I states that the development of a fault can cause earthquakes. This is because the stress and pressure that builds up when the tectonic plates move can cause the rocks to fracture and create a fault. Option II is correct because the movement along a fault, known as fault slip, can release the accumulated stress and energy, resulting in an earthquake. Option III is also correct because a volcanic eruption can cause earthquakes due to the movement of magma beneath the Earth`s surface.

Option IV, which includes folding of rocks, is incorrect. Folding of rocks is a different geological phenomenon and not directly linked to earthquake activity.