Which of the following identifies the most likely effects of a significant fall in economic growth?

	Effect on unemployment	Effect on balance of trade deficit
A	Decrease	Decrease
B	Decrease	Increase
C	Increase	Decrease
D	Increase	Increase

A significant fall in economic growth is a recession. During a recession, firms see a drop in demand for their products, so they cut back on production and lay off workers, causing cyclical unemployment to increase. As people's incomes fall and businesses invest less, the overall demand for goods and services, including imports, decreases. A fall in imports, assuming exports remain constant or fall by less, will lead to a reduction in the trade deficit (or an increase in a surplus).