Since the filament breaks, there is not pathway for current along the wire connected to lamp X. Current can only flow through the branch (which is now converted from parallel to series).
We know that resistance in series is always greater than resistance in parallel.
Therefore, overall resistance would increase.
Since overall resistance increases and voltage remains the same, reading in ammeter 1 must decrease.
R = V/I shows that resistance is inversely proportional to current. So provided that voltage is same, if overall resistance increases, overall current must decrease.
When lamp X was working, current had 2 paths, 1 through lamp X and the second, through the branch. Now that lamp X has blown, all current must be flowing through ammeter 2. Therefore, current in ammeter 2 increases.
Reading on ammeter 1 = decreases
Reading on ammeter 2 = increases
Total resistance of the circuit = increases
Hence, the answer is D.