Which action is an example of domestic policy?

The correct answer is D. An example of domestic policy is: a governor signs a law that bans smoking in public facilities.

Explanation:

Domestic policy refers to the internal decisions of a government, that are related to the administration of the country's affairs, differentiated from its foreign policy, which is the one that refers to the relations of the country and to its national interests with other countries and international organizations.

As the prohibition of smoking in public facilities only affects the inhabitants of that particular state, it is a clear example of domestic policy.