Hi Ashish and Nicole,
I think you would need the verbatim text of the question rather than something from memory. Changing just a single word in the question can lead to a completely different answer. I would be interested in seeing what the other two options were as well. Also, high quality practice questions (like those in the PM Exam Simulator) should include detailed explanations along with supporting references. As far as this question as it is written, there really isn't anything in the PMBOK® Guide to support either response. I would think that the project sponsor along with the project manager would make this decision based upon the needs of the particular project.