Campaign priorities determine your bids according to which rule:

if you have multiple campaigns with the same bid, the lowest necessary bid will be used
the highest priority campaign will bid, unless a lower priority bid is high enough
if the highest priority campaign is out of budget, the lower priority campaign bids
if the highest priority campaign is out of budget, lower priority budget is added to bids

The correct answer is:

if the highest priority campaign is out of budget, the lower priority campaign bids.