Phase Encoding Timing
INCORRECT. Choose "No".

Phase encoding is now introduced, depicted as a series of possible gradient strengths for each time the pulse sequence is repeated. This pulse sequence will be modified further in subsequent questions.
CORRECT. Slice selection must be completed before any phase encoding may be introduced. This is because the net magnetisations of spins must be precessing in the xy-plane before the introduction of a phase difference between them is possible.
The rephasing gradient applied in the slice selection direction (equal to half of the slice selection gradient in area) may be applied during phase encoding; the rotation of net magnetisations into the xy-plane caused by the RF pulse is finished. Since the slice selection gradient direction and the phase encoding gradient direction are orthogonal, they will not interfere with each other.
Further reading on this topic:
Books: Q&A in MRI p82
Online: Basics of MRI