smc

Let the larger side of the rectangle be y and the smaller side of the rectangle be x. Then, by pythagorean theorem, the diagonal of the rectangle has length $\sqrt{x^2+y^2}$. By the definition of the problem, the area of the new rectangle is $(\sqrt{x^2+y^2}+y)(\sqrt{x^2+y^2}-y)$ Expanding this gives the area of the new rectangle to be $x^2$, or $\boxed{\text{equal to the area of a square with its side equal to the smaller side of the given rectangle}}$.