Final answer:
Purchasing inventory for cash will decrease both the current and quick ratio. An increase in demand for loans and an increase in supply of loanable funds will raise the quantity of loans, while a rise in the supply of loanable funds is associated with lower interest rates.
Step-by-step explanation:
The purchase of inventory for cash will decrease the current ratio because it reduces the current assets without immediately affecting current liabilities. The current ratio is calculated by dividing current assets by current liabilities. When cash is used to purchase inventory, cash (an asset) decreases but current liabilities remain unchanged, leading to a lower current ratio.
The purchase of inventory for cash will decrease the quick ratio as well. The quick ratio is similar to the current ratio but excludes inventory from current assets because inventory is not as easily liquidated as cash or receivables. When you purchase more inventory with cash, you're effectively reducing the liquid assets (cash) while increasing less liquid assets (inventory), thus lowering the quick ratio.
Regarding the financial market and the changes that will lead to an increase in the quantity of loans made and received: an increase in the demand for loans or an increase in the supply of loanable funds would both contribute to a higher quantity of loans being made. Conversely, lowering interest rates is generally associated with a rise in supply of loanable funds, as it typically encourages more lenders to offer loans at cheaper rates, making borrowing more attractive.