In the given picture, you can see that there are two matchsticks that have been used to create five squares. You are allowed to move just two matchsticks and must form seven squares. FYI, you cant overlap the matches and you are not allowed to break them. Also, like you can see in the picture, all squares must be closed.
We have moved two matchsticks in the picture and colored them red so you can understand what happened. Thus we have five 1x1 square, one 2x2 square and one 3x3 square.
