B

Step 1: Understanding the telescope's function
An astronomical telescope primarily consists of two lenses: the objective lens and the eyepiece lens. The objective lens gathers light and focuses it to form an image, while the eyepiece lens magnifies this image.

Step 2: Effect of increasing aperture diameter
Increasing the diameter of the objective lens (aperture) improves two key aspects:
1. Resolving power: This is the ability of the telescope to distinguish between two closely spaced objects. The resolving power is directly proportional to the diameter of the aperture. As the diameter increases, more light is collected, resulting in improved resolution.
2. Magnifying power: Although the magnifying power is determined by the focal lengths of the objective and eyepiece, a larger aperture allows for collecting more light, thus enabling the telescope to perform better at higher magnifications without loss of clarity.

Step 3: Conclusion
Therefore, both the magnifying power and the resolving power of an astronomical telescope increase when the diameter of the aperture of the objective is increased.

Hence, the correct answer is Option B: Magnifying power and resolving power both are increased.