Final answer:
The velocity of the caboose will increase due to gravity as it rolls freely downhill after breaking loose from the train moving up a steep grade.
Step-by-step explanation:
When a caboose breaks loose from a train moving up a steep grade with constant velocity, the caboose will start to experience a change in velocity. Since there is no longer any force propelling the caboose uphill (such as the engine of the train), and considering that it is on a steep grade, the force of gravity will cause the caboose to accelerate downhill. Therefore, the correct answer to what will happen to the velocity of the caboose is that the velocity of the caboose will increase as it rolls freely down the slope, unless other forces, such as friction or air resistance, act significantly enough to slow it down.