The length of sides of the original image ABCD is
AB = 4
BC = 4
CD = 4
DA = 4
The length of the sides of ABCD after the dilation is
A'B' = 2
B'C' = 2
C'D' = 2
D'A' = 2
As you can see, the lengths are reduced by one-half (1/2).
So, it is clearly a reduction.
Therefore, the correct answer is the 2nd option.
1/2, reduction