The answer is B
Explanation
I believe it would be B, because there are two subjects that the speaker is referring to at the beginning of the sentence; the caterpillar and the leaf. When they use the word "it" in the second half of the sentence it is unclear whether they mean to say if "it" is the leaf or the caterpillar which they are carrying to their brother.
It would be transitive. A transitive has a direct object, something that it the verb is acting on. The verb is belive. The direct object is what it's acting on, so, what is he believing? In music. He is believing on the music, so since it has a direct object, it's transitive.
It would be intransitive if it didn't have a direct object:
<em>I believe.
</em><em>He believed.
</em><em />
But as soon as you add any kind of direct object it's transitive:
<em>I believed him.
</em><em>He believed the dog.</em>
