When creating a new VHD, what must be selected to ensure it expands as needed?

To ensure that a Virtual Hard Disk (VHD) expands as needed, the option that must be selected is "dynamically expanding." This type of VHD is designed to start small and grow as data is added to it. Initially, it consumes only a small amount of storage space on the physical disk, but as you write more data to it, the VHD can expand up to its maximum size limit. This feature provides flexibility and efficient use of disk space, particularly beneficial when storage capacity is a concern.

Choosing a fixed size would not allow the VHD to expand; rather, it would occupy a predetermined amount of space from the outset, which can lead to wasted resources when not all that space is utilized immediately. The terms "expandable" and "variable size" are not standard descriptions in VHD creation contexts and may lead to confusion, as they don't directly indicate that the file will adjust its size dynamically as required. Therefore, selecting "dynamically expanding" is the clear choice for enabling this expansion feature.