Evaluate the assumptions underlying the traffic department's decision to remove traffic signals during peak hours at congested junctions.

The traffic department's decision is to remove traffic signals from a few highly congested junctions during peak hours to improve flow.

Let's evaluate each assumption:

• Assumption 1: Some junctions are responsible for a large portion of traffic delays. If this assumption were not true, meaning the selected junctions contribute only a small amount to overall delays, then removing signals from them would not significantly improve traffic flow. The decision to target "highly congested junctions" implies that these junctions are indeed major contributors to delays. Therefore, this assumption is necessary for the decision to be effective.

• Assumption 2: Removing signals at selected junctions can improve flow without creating serious problems elsewhere. If removing signals at these junctions were to cause serious problems elsewhere (e.g., by diverting traffic to less suitable routes, increasing accidents, or creating new bottlenecks), then the overall goal of improving traffic flow would be undermined, or the solution would create new issues. For the decision to be a beneficial and viable solution, it must not lead to unintended negative consequences that outweigh the benefits. Therefore, this assumption is necessary.

Both assumptions are essential for the traffic department's decision to be a logical and effective strategy for improving traffic flow.

The correct option is C.

$\boxed{\text{C. Both}}$