Let 1997 rent = p
From the question:
rent in 1998 = p*(1+x/100)
rent in 1999 = p*(1+x/100)*(1-y/100)
Difference between 1999 and 1997 = p*(1+x/100)*(1-y/100) - p

Question is: Is p*(1+x/100)*(1-y/100) - p > 0 ? (is the difference between 1999 and 1997 positive? )
=>Is p*(1 - y/100 + x/100 - xy/10000) - p > 0?
=> Is p*(x/100 - y/100 - xy/10000) > 0?
Since p cannot be 0
=> Is (x/100 - y/100 - xy/10000) > 0? ........................................................(1)

From #1: x>y
using x>y in (1), we are unable to conclude if (x/100 - y/100 - xy/10000) > 0?
Hence #1 by itself is insufficient.

From #2: xy/100 < x - y
Rearranging terms in (1) we get
Is (x/100 - y/100 - xy/10000) > 0?
=>Is x/100 - y/100 > xy/10000
=> Is x- y > xy/100 ?
But #2 states precisely that x- y > xy/100

Hence p*(1+x/100)*(1-y/100) - p > 0 => the difference between 1999 and 1997 is positive
=> 1999 rent > 1997 rent

Hence #2 alone is sufficient
Hence B


Thx. for posting - interesting question!