Final answer:
The correct diagram is option C, which indicates interurban street cars' development, leading to the rise of middle-class suburbs. This reflects the crucial role public transit played in shaping urban development before the widespread adoption of the automobile, which further decentralized cities into sprawling suburbs.
Step-by-step explanation:
The diagram that shows how changes in transportation affected urban areas in the United States is option C: Interurban street cars were developed. This development led to the emergence of middle-class suburbs outside of major cities. The invention of the electric streetcar allowed people to live farther from their work and still have reasonable commute times. As a result, streetcar suburbs grew, often segregated by ethnicity and race. Fewer people lived in downtown areas, transforming them into centers focused on retail and manufacturing, with cities remaining oriented around a Central Business District (CBD).
Subsequently, the mass production and popularity of the automobile after 1920 further transformed urban landscapes. The ability to drive significantly beyond the limits of public transit routes enabled the creation of even more decentralized, automobile-dependent suburbs. This shift in transportation sparked significant changes in shopping and living patterns, with shopping malls and residences spreading outward to create a suburban sprawl that was no longer tied to public transportation networks.