At the lower undergraduate level, instructors typically look for a basic understanding of the information. Therefore, you will likely be using more direct quotes at this level than at the graduate level. At the upper undergraduate level, instructors begin to expect a certain degree of analysis and originality from you, which means you should use direct quotes sparingly and do your best to summarize and paraphrase (with a citation) all ideas you use from other sources.
The graduate level is similar to the upper undergraduate level. Instructors expect a high level of original and critical analysis, as well as very few (if any) direct quotes.

At the lower undergraduate level, your sources will mainly be textbooks and classroom handouts or videos. At the upper undergraduate level, you will begin to look at the primary sources and scholarly literature. During the final stages of your undergraduate experience, begin to incorporate primary and peer-reviewed scholarly sources. At the graduate level, your sources expand to include textbooks as well as peer-reviewed scholarly literature. At the graduate level, you should not rely on your textbooks and class handouts as much as the peer-reviewed literature.  More specifically, at the doctoral level, the general "rule of thumb" is a maximum of 2 textbooks and mostly peer-reviewed, scholarly literature from within the last 5-7 years.