This problem is to test basic mathematics skill. It asks whether you know how to expand (a+b)^2 (squared), which gives us, a^2+2ab+b^2.
The question states that x^2=y^2+1 and that xy≠0 which means x and y have some value (positive or negative) and are not 0.
To calculate for option A, we need to square x^2, because x^2^2 = x^4, its just like (a^m)^n = a^mn (where you multiply m and n).
So the RHS (right hand side) will become (y^2+1)^2 = y^4 +2y^2 +1.
Now option B is only y^4+1, and does not have 2y^2, since it is stated that xy≠0, y cannot be 0, and thus, option A will be always greater than option B.
Thus option A is the answer.
This is a problem of basic mathematics and would recommend to have a look at this webiste:
https://www.toppr.com/guides/maths-formulas/algebra-formula/