For each of the following scenarios, determine whether the situation described can be attributed to the real-balances effect, the interest-rate effect, or the foreign-purchases effect.1. As a result of an increase in the price level, the cost of borrowing increases, which causes people to buy fewer cars. A. Foreign-purchases effectB. Interest-rate effectC. Real-balances effect
2. When the price level decreases, restaurants become busier as more people purchase restaurant meals. A. Foreign-purchases effectB. Real-balances effectC. Interest-rate effect

Afirm wants to strengthen its financial position. which of the following actions would increase its current ratio? a. reduce the company's days' sales outstanding to the industry average and use the resulting cash savings to purchase plant and equipment.b. use cash to repurchase some of the company's own stock.c. borrow using short-term debt and use the proceeds to repay debt that has a maturity of more than one year.d. issue new stock, then use some of the proceeds to purchase additional inventory and hold the remainder as cash.e. use cash to increase inventory holdings.