D

Step 1: Understand the forces acting on a satellite in orbit. A satellite in orbit is under the influence of gravitational force and may also experience air resistance when it is in an atmosphere (though most satellites operate in a near-vacuum).

Step 2: Analyze the effect of air resistance. As air resistance acts opposite to the direction of motion, it exerts a drag force on the satellite. This drag force does work against the satellite's kinetic energy. Due to this work done against the force of air resistance, the kinetic energy (K.E.) of the satellite will decrease.

Step 3: Consider the potential energy (P.E.). The gravitational potential energy for a satellite in orbit is given by the formula $U = -\frac{GMm}{r}$, where $G$ is the gravitational constant, $M$ is the mass of Earth, $m$ is the mass of the satellite, and $r$ is the distance from the center of the Earth to the satellite. As the satellite loses altitude due to the drag from air resistance, $r$ decreases and hence the absolute value of potential energy increases (meaning it becomes less negative). Actually, potential energy may be said to not fully