First off, you should provide an understand of the terms and what they mean/aim to achieve. Both progressive enhancement and graceful degradation refer to methods for handling a larger concept of accessibility. Specifically progressive enhancement and graceful degradation deal with the problem of technology and support.
Progressive enhancement is the concept of starting at a baseline for user experience for most browsers (usually covering 'old' browsers). Advanced features are then added when a browser is able to support them. In this scenario, we don't dumb down the experience to support older browsers.
Graceful degradation taks the opposite approach. It builds the experience focused on 'modern' browsers thus able to provide a potentially more rich experience. It will then gracefully degrade this experience for old environments but still maintain basic functionality.
For example, older version of Internet Explorer may not have a full featured experience but they would still have maintain the basic functionality.
Often times this also means defining and conveying a browser support level.
They ultimately are very similar things with just slightly different approaches, but it is important to understand these concepts. There is no absolute better of the two, but your interviewer may have opinions and you should be comfortable with talking about it.