Unless you are a felon and have something to hide, always be honest and open with your answer. If the LEO gets suspicious and decides to investigate, you would have already lied once and you are not in a favorable position and no matter what you say thereafter, will be looked upon with a dubious eye.
Got stopped for speeding late one night while returning home with my wife. The LEO was the County Deputy Sheriff. His first question: Sir, do you own the vehicle. My reply: Yes. (Short, and to the point.) Sir, do you have any concealed weapons in your car? My response: Yes, I am a retired Federal Agent. His reply, Have a good night. I related this story to a friend who is a retired local LEO. He said he would have said the exact same thing as I did except he would have ID'd himself as a local LEO. OH, and if you ever get stopped for any reason, keep both hands on the steering wheel until the LEO is comfortable enough to ask you for your license and registration. Make him feel good and perhaps, just perhaps you may get a warning.
If I had lied and said no and he decided to search my car, at the very least it would have been very time consuming, maybe cost me a trip to the judge and the expense of a lawyer as to why I was lying, etc. etc., not to mention the speeding ticket.