The reaction represents a decomposition reaction because XY is broken into its constituents.
A decomposition reaction is one in which the reactant is broken up into its constituents. In this case, the reactant is XY. The reactant is shown in the left hand side. The reactant is broken up to yield the products. X and Y.
Since the reactant was broken up into the one white and one gray circles labelled X and Y, then the reaction is a decomposition reaction.
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