Reduced imports improve trade balance in recession

Steps:

• Reduced consumer expenditure lowers demand for both domestic and imported goods.
• Decreased imports directly reduce the value of imports in the trade account.
• Trade deficit equals imports minus exports; lower imports shrink the deficit assuming exports stable.
• Recession context reinforces import decline without boosting exports significantly.

Why A is correct:

• Trade account deficit = imports - exports; reduced imports lower this gap per balance of payments definition.

Why the others are wrong:

• B: Less borrowing in recession likely raises savings as consumers spend less.
• C: Terms of trade (export/import price ratio) unaffected without price change evidence.
• D: Recession typically raises unemployment via lower production and demand.

Final answer: A