According to the PMBOK Guide, 6th edition, page 18, a project manager should use a combination of leadership styles depending on the situation and the needs of the team.
In this case, the project manager should have used a collaborative or facilitative style to engage the team members in the agile development approach, empower them to make decisions, and set clear and measurable goals.
This would have helped to create a shared vision, foster trust and commitment, and improve team performance and satisfaction.
By contrast, the other options (A, B, and D) are more indicative of a directive or controlling style, which could have increased the resistance and confusion of the team members, reduced their motivation and creativity, and created a blame culture.
References: = PMBOK Guide, 6th edition, page 18; Agile Practice Guide, page 13.