If the Supplemental Info from your broker does not list the State(s) associated with the tax-exempt dividends you received, yes, you can choose North Carolina, your Resident State.
Basically, this is for state tax, and your home state won't tax dividends earned there.
Here's more info on What State are My Tax Exempt Dividends From?
You probably have to look though all the backup detail sheets if they sent them with the 1099. The funds should be listed.
i.e. it usually is NOT NC...you only use NC if all the tax-exempt $$ came from NC bonds...and that will happen on a 1099-DIV only if you had a bond fund that invested exclusively in NC bonds.
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A simple answer for a mixed Muni bond fund (i.e. not exclusively NC) is to go to the bottom of the list of states and select "Multiple States".
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But, if you can find enough information from the fund to delineate "exactly" how much came from NC bonds, you are allowed to (but are not required to) break out those NC $$ amounts to possibly get some reduction in NC state taxes.....BUT, again, you have to get the information from the funds, and your supplemental tax data sheets to do that...otherwise you just select "Multiple States" for the entire lot and move on.
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IF you do decide to try breaking out the NC $$ you'd do it as shown below:
(NC also exempts $$ from any US Territories):
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