Effect of Small Air Gap
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A smaller air gap reduces magnetic reluctance, so less magnetizing current is required to establish the working flux. This improves power factor and reduces magnetizing reactive demand, although the gap cannot be made arbitrarily small because of mechanical clearance and harmonic/unbalanced-pull considerations. The listed benefit corresponds to option D.

Small gap mainly reduces magnetizing current.
Do not ignore required mechanical clearance between stator and rotor.
Small gap mainly reduces magnetizing current.