Why is the Amazon rain forest being cut and cleared?

The correct answer is Option (3) → Both (1) and (2)

The Amazon rain forest in South America is so huge that it is called the ‘lungs of the planet’, and it is home to probably millions of species. It is a well-known example of habitat loss: large areas are being cut and cleared to grow soya beans and to make grasslands for beef cattle. Both reasons given in the options are therefore true.

Option (1) For cultivating soya beans — Correct statement, but it is only one of the correct points, so on its own it is not the answer. Large tracts of the forest are cleared to make room for soya bean cultivation.

Option (2) For conversion to grassland for raising beef cattle. — Correct statement, but it is only one of the correct points, so on its own it is not the answer. Forest land is also turned into grasslands where beef cattle are raised.

NCERT Extract:
Loss of Biodiversity – “… (i) Habitat loss and fragmentation: This is the most important cause driving animals and plants to extinction. The most dramatic examples of habitat loss come from tropical rain forests. … The Amazon rain forest (it is so huge that it is called the ‘lungs of the planet’) harbouring probably millions of species is being cut and cleared for cultivating soya beans or for conversion to grasslands for raising beef cattle.”