Solution: Let us denote $\mathrm{interior}(A)$ by $\mathrm{int}(A)$. We will draw the two sets $M$ and $N$.
Set $M$
Set $N$
From the figures above, it is clear that $M$ is path connected and hence connected, whereas $N$ is disconnected. More precisely, $X = \mathrm{int}(A)$ and $Y = \mathrm{int}(B)$ give a separation of the set $N$. Thus, the correct answer will be (C).