How do variations in temperature affect the altimeter?
A.	Pressure levels are raised on warm days and the indicated altitude is lower than true altitude.
B.	Higher temperatures expand the pressure levels and the indicated altitude is higher than true altitude.
C.	Lower temperatures lower the pressure levels and the indicated altitude is lower than true altitude.

Answer (B) is incorrect.
Expanding (or raising) the pressure levels will cause indicated altitude to be lower (not higher) than true altitude.

Answer (A) is correct. (FAA-H-8083-25 Chap 8)
On warm days, the atmospheric pressure levels are higher than on cold days. The altimeter will indicate a lower than true altitude. Remember, “low to high, clear the sky.”

2.7   ALTIMETER ERRORS
Since altimeter readings are adjusted for changes in barometric pressure but not for temperature changes, an airplane will be at lower than indicated altitude when flying in colder than standard temperature air when maintaining a constant indicated altitude.
On warm days, the altimeter indicates lower than actual altitude.
Likewise, when pressure lowers en route at a constant indicated altitude, your altimeter will indicate higher than actual altitude until you adjust it.
Remember, when flying from high to low (temperature or pressure), look out below.
Low to high, clear the sky.