(A) is correct. A Multitasking OS is one that gives the perception of 2 or more processes running at the same time. Here preempting and giving chance to another process gives a perception of many processes executing in parallel.
(B) is correct, because there is a transition back to Ready state from Running state.
(C). Mid-Term Scheduler reduces degree of multiprogramming, and it takes the decision of swapping the process. It swaps out processes that are waiting (need I/O) or low priority processes and swapping in other processes that were in ready queue. So, above transition diagram doesn't contain suspension states. So, it is not possible to swap out a process. Thus degree of multi-programming cannot be reduced.
