**Core Concept**
In diabetes, the body's utilization of glucose for energy production is impaired due to insulin resistance or deficiency. This leads to a shift in the body's primary energy source from glucose to fatty acids, resulting in a decrease in the respiratory quotient (RQ).

**Why the Correct Answer is Right**
The respiratory quotient (RQ) is a measure of the ratio of carbon dioxide produced to oxygen consumed during cellular respiration. Normally, the RQ is around 0.8-1.0, indicating that glucose is the primary energy source. In diabetes, the impaired glucose utilization leads to an increase in fatty acid oxidation, resulting in a decrease in RQ to around 0.7-0.8. Administration of insulin helps to restore normal glucose utilization, thereby increasing the RQ back to its normal range.

**Why Each Wrong Option is Incorrect**
**Option A:** RQ does not always increase in diabetes. While some diabetic patients may have an increased RQ due to increased glucose levels, others may have a decreased RQ due to impaired glucose utilization.

**Option B:** Giving insulin does not lead to an increase in RQ. Instead, it helps to restore normal glucose utilization, which increases the RQ.

**Option C:** RQ does not always decrease in diabetes. As mentioned earlier, some diabetic patients may have an increased RQ due to increased glucose levels.

**Clinical Pearl / High-Yield Fact**
Remember that the RQ is an important indicator of the body's energy source. A decreased RQ in a diabetic patient may indicate impaired glucose utilization, while an increased RQ may suggest hyperglycemia.

**✓ Correct Answer: D. RQ decreases & on giving Insulin it again increases**