The correct answer is “with”.
The word “with” is used to indicate the instrument or tool that is used to perform an action. In this case, the action is “cut” and the instrument is “knife”. Therefore, the correct answer is “with”.
The other options are incorrect because they do not make sense in the context of the sentence. The word “by” is used to indicate the agent or cause of an action. In this case, the agent is not specified, so the word “by” cannot be used. The word “in” is used to indicate location or position. In this case, the location is not specified, so the word “in” cannot be used. The word “into” is used to indicate a change of state or direction. In this case, there is no change of state or direction, so the word “into” cannot be used.