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The algae bringing about nitrogen fixation:
A. Nitrosomonas
B. Nostoc
C. Pseudomonas
D. Chlamydomonas

Answer
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Hint: Nostoc is a cyanobacterium and such organisms are also called blue-green algae. This bacterium oxidizes ammonia into nitrite as a metabolic process.
It is known as nitration (a step of Nitrification).

Complete answer: Nitrosomonas is a genus of Gram-negative and rod-shaped chemoautotrophic bacteria. It cannot fix atmospheric nitrogen.
Nostoc is a genus of cyanobacteria in the family Nostocaceae.
It has common names such as star jelly, mare's eggs, facia, etc.
It is a microorganism composed of beaded filaments that aggregate to form a gelatinous mass. These grow in water and damp places.
Nostoc species are able to fix nitrogen from the atmosphere.
These species establish nitrogen-fixing symbiotic associations with representatives of the four types of terrestrial plants: some bryophytes (hornworts and liverworts), the pteridophyte Azolla, gymnosperm cycads, and the angiosperm Gunnera.
Nostoc, Anabaena are cyanobacteria but also are known as blue-green algae.
Hence, these are the “algae” which can take part in nitrogen fixation.

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Pseudomonas bacterium is a genus found widely in the environment, e.g. in soil, water, and plants. These can reduce the nitrates back into nitrogen gas (N2) and so they are called denitrifying bacteria.
Chlamydomonas is a genus of single-celled green algae. These are found in soil and freshwater. These are unable to fix atmospheric nitrogen.

So, the correct answer is B. Nostoc.

Note: In Nostoc sp., heterocyst is the cellular site of nitrogen fixation.
It protects nitrogenase from inactivation by O2.
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