Answer:
One of the effects of heat on matter is that it makes to vary the volume occupied by the bodies. If a body is heated it increases its volume, this means it expands and is called dilation. When that same body cools, it reduces its volume, this means it contracts.
This is because when a body is heated, the molecules move faster (due to the kinetic energy increase) collide strongly and separate among them (they expand). But when a body cools the molecules move more slowly due to the kinetic energy decrease among them and move closer together due to their mutual attraction.
For example, in this case after the student blows up the balloon and then places it in the freezer, the gas inside the balloon will cool, hence the molecules of that gas will join among them, making the balloon to loose volume and shrink.
So, the right answer is:
As the balloon gets cooler, the molecules lose energy and move closer together causing the balloon to shrink.
