As it stands, the question is poorly phrased. Even if one part of the solution is clearly false, the boolean 'OR' operation makes the statement true if the other part is true - "True or False ... 1=1 OR 1=0?" - which rather detracts from a clever example of using the CASE statement to update the column based on its current value.
The question that follows, what would the 'FALSE' answer look like - updates the data unsuccessfully (?) OR fails, and doesn't throw an error?