State funding of elections refers to the provision of financial resources by the state to political parties to cover the cost of their electoral campaign activities. The correct answer is indicating that state funding of elections happens in Germany and Austria (option 4).

Option 1 (USA and Canada) is incorrect, as the primary source of political campaign funding in the United States comes from private sources, not from the state. In Canada, while there is some public financing, it`s not as extensive as in Germany and Austria.

Option 2 (Britain and Switzerland) is not accurate because, in Britain, state funding is only made available for ‘policy development’ not election campaigns and in Switzerland, no public financing is provided to political parties.

Option 3 (France and Italy) is not entirely correct. While France and Italy do have forms of public financing for political parties, their systems aren`t as extensively structured around state funding as in Germany and Austria. Therefore, option 4 is indeed the most correct.