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Chad was asked whether the following equation is an identity:$\newline$$$(3 x+2 y)^{2}=(3 x+2 y)(3 x-2 y)+2(2 y)^{2}$$$\newline$He performed the following steps:$\newline$$$(3 x+2 y)^{2}$$$\newline$$\stackrel{\text { Step } 1}{\hookrightarrow}=9 x^{2}+4 y^{2}$$\newline$$\stackrel{\text { Step } 2}{\hookrightarrow}=9 x^{2}+4 y^{2}+4 y^{2}-4 y^{2}$$\newline$$\stackrel{\text { Step } 3}{\hookrightarrow}=\left(9 x^{2}-4 y^{2}\right)+8 y^{2}$$\newline$$\stackrel{\text { Step } 4}{\hookrightarrow}=(3 x+2 y)(3 x-2 y)+2(2 y)^{2}$$\newline$For this reason, Chad stated that the equation is a true identity.$\newline$Is Chad correct? If not, in which step did he make a mistake?$\newline$Choose $1$ answer:$\newline$(A) Chad is correct.$\newline$(B) Chad is incorrect. He made a mistake in step $1$.$\newline$(C) Chad is incorrect. He made a mistake in step $2$.$\newline$(D) Chad is incorrect. He made a mistake in step $4$.