Window Size = 7.
Sequence number = 3 bits,hence 8 frames can be numbered from 0-7 and again the number repeats for the next set of frame.
7 6 5 4 3 2 1 0 7 6 5 4 3 2 1 0 -> Initial configuration at sender (Bolded ones are the frames within the window)
ACK3 is not received by A, but ACK4 is received by A which indicates all the frames till frame 4 have been received correctly.
At this point the sender configuration is: 4 3 2 1 0 7 6 5 4 3 2 1 0 7 6 5.
Now frame 5 is lost, so the whole window i.e. 5 6 7 0 1 2 3 is resent, which is option A.