The radius of the circle is increased by 20%.

Use the successsive percentage change formula $x + y + (x \times y)/100$. Since the area is proportional to $r^2$, apply it twice for $r=20\%$: $20 + 20 + (20 \times 20)/100 = 40 + 4 = 44\%$.

Most students mistakenly answer 20% or 40% by assuming linear relationship, forgetting that area is a two-dimensional quantity dependent on the square of the radius.

This logic applies to all 2D shapes where dimensions scale, such as the area of a square ($side^2$) or the area of a rectangle ($length \times width$).