The correct answer is (b) 37.5%.
The area of a circle is given by the formula $A = \pi r^2$, where $r$ is the radius of the circle. If the radius is increased by 25%, then the new radius is $r + 0.25r = 1.25r$. The new area is $A = \pi (1.25r)^2 = 1.5625 \pi r^2$, which is an increase of 37.5%.
Option (a) is incorrect because the area of the circle does not increase by 25% when the radius is increased by 25%. The area increases by 37.5%.
Option (c) is incorrect because the area of the circle does not increase by 50% when the radius is increased by 25%. The area increases by 37.5%.
Option (d) is incorrect because the area of the circle does not increase by 56.25% when the radius is increased by 25%. The area increases by 37.5%.