"The exam was extremely difficult."

The correct answer is Option (3) → Adverb of Degree

An adverb is a word that tells how, when, where or how much something happens. It can also describe an adjective or another adverb, for example she sings sweetly, very hot.

Here extremely goes with the adjective “difficult”. It tells how difficult the exam was. It was very, very difficult.

Option	What it tells	Example
(1) Adverb of Reason	why something happens (therefore, hence)	It rained all day and therefore the match was put off.
(2) Adverb of Time	when something happens (today, soon, yesterday)	The results will come out tomorrow.
(3) Adverb of Degree (answer)	how much? or to what extent? (very, too, quite, almost, extremely)	It was extremely cold in Shimla last week.
(4) Adverb of Manner	how an action is done: “extremely” does not describe an action	She closed the door gently.