This page suggests that option 2 is correct:

http://msdn.microsoft.com/en-us/library/ms186289.aspx

You can re-create a whole database in one step by restoring the database from a full database backup to any location. Enough of...

IF you have Northwind installed, the statement will update a Northwind Categories table and use the values from the inserted/deleted OUTPUT option to insert into the temp table.

I chose C because there wasn't a 'D - None of the above'.

My instance of SQL 2005 coughs with the error:

Msg 208, Level 16, State 1, Line 1

Invalid object...

Ideally this question would have included the Categories table with the INSERT to remove the dependency on Northwind. This would also remove any doubt as to the number of records...

I agree the answer was 1,3,4.

Ideally the QOTD answers would be validated before posting, and there would be a way to get partial credit for the multiple choice answers....