This is a well known, rather poor JAR question. Strictly speaking none of the options are true, but A is the least untrue. To understand what I mean by this we need to consider what the "Barbers' Pole" actually indicates.
The maximum speed at which an aircraft may be flown depends upon its altitude. At low altitude the limiting speed is Vmo, whereas at high altitude the limiting speed is a mach number Mmo. The purpose of the "Barbers' Pole" is to give an indication of the CAS value of whicheve of these two speeds is the most limiting. So at low altitudes it indicates Vmo.
As altitude increases, the TAS equating to Vmo increases due to decreasing air density. At the same time, the local speed of sound (LSS) decreases due to decreasing temperature. Mach number is equal to TAS/LSS. So as altitude increases, the increasing TAS and decreasing LSS cause Vmo and Mmo to move closer together. At a certain altitude the CAS equating to Vmo is equal to the CAS equating to Mmo. This is the altitude at which a climbing aircraft shifts from being limited by Vmo to being limited by Mmo.
So as an aircraft climbs above this altitude the "Barber's Pole" changes from indicating Vmo and starts to indicate the CAS equating to Mmo. This means that the "Barbers' Pole" indication remains constant up to a certain altitude then starts to decrease.
So strictly speaking the pole indicates Vmo at low altitude and Mmo at high altitude. It never actually indicates any altitude or temperature. But the dominant factor in the change-over from one limit to the other is increasing altitude, so the best answer to this question is option A.