I approached this problem logically...
Since both a and b are greater than 1, \((a^x)(b^y)\) will be less than 1 if:
-both x and y are negative (and the exact values of a or b dont matter), or
-one of x or y is negative and the other is non negative, but then we need to know how big or small is (a^x) and how big or small is (b^y).... because it's possible that (a^x)(b^y) is something like (1/100)*5 which is less than 1... or (1/2)*4 which is greater than 1
Statement 1
This tells us that x+y is less than 0. We dont know if both x and y are negative. However, we do know that at least one of x and y is negative. We still dont know a and b, thus this statement is insufficient.
Consider a=2, b=10, x=-3, y=2. Then \((a^x)(b^y)=2^{-3}10^2=\frac{1}{8}*100\) .... greater than 1
Consider a=2, b=2, x=-3, y=2. Then \((a^x)(b^y)=2^{-3}2^2=\frac{1}{8}*4\).... less than 1
This example can be used to show that Statement 2 is insufficient and that both statement combined are insufficient.
Answer: E