The correct statement is: Both a short story and novel contain the traditional narrative arc, but a short story moves much quicker through the arc.
In essence, both short stories and novels typically feature a narrative arc that includes exposition, rising action, climax, falling action, and resolution. However, due to their brevity, short stories tend to progress more rapidly through these stages, often focusing on a single conflict or moment, while novels provide more space for character development, subplots, and complex themes, allowing for a more gradual progression through the arc.