To be successful with this question, you will need to know about the two forms of energy. You will also need to understand the significance of the "friction-free" statement in the description of the situation.
Energy Forms
Kinetic Energy (KE): Kinetic energy is the energy of motion. If an object is moving , then it has kinetic energy. If an object speeds up between initial and final states, then the final KE is greater than the initial KE. And the opposite is true for a slowing down object.
Gravitational Potential Energy (PE): Gravitational potential energy is the stored energy of vertical position resulting from the interaction of the Earth and an object. If the system includes the Earth and the object, then it possesses this form of energy. The amount depends (in part) on height. Objects at higher positions have more PE than those at lower positions.
"Friction Free"
Friction would do work upon the moving disk. This work would remove mechanical energy from the disk, changing it into thermal energy. But in this question, the surface is said to be friction-free. The normal force acting upon the disk acts perpendicular to the motion and does not do work on the disk. And so the total mechanical energy of the disk is constant. As the disk slides up and down along the surface, KE is changed to PE and PE back to KE. But the sum or total amount of these two forms stays constant. If the height decreases, then you can expect the PE to decrease. The KE will then increase to make up for this loss of PE.