The dry ice absorbs heat from the air in the flask and become CO2 gas directly. So the heat flow from air to dry ice. And the CO2 gas increase the amount of the air. Though the temperature decreases, the balloon still inflates.
I believe the correct answer is A. All of the other choices except A is related or associated with chemical equilibrium and should follow Le Chatelier's Principle. We take in oxygen and it is one of the reactants for cellular respiration where one of the products is CO2 and is the one being released not O2.