@Karen1027 You need to understand the difference betwen an Inquiry and a Booking Request, You have used the terms interchangably in your post.
Inquiry- Does not block dates. Requires a "Pre-approval", a "Decline", or you can opt to simply message back within the 24 hour window if the the guest is asking for things inappropriate to your listing, or you need to get things clear with them. There is no need to either pre-approve or decline these. Inquiry will expire in 24 hours. Pre-approve if you feel okay about the booking, but never decline- no need to hurt your acceptance rate for these- just message back.
Booking Request- Blocks the dates. You need to either "Accept" or "Decline" these within 24 hours. But you can message with the guest before making a decision, as long as you click one of those within 24 hours.
And there is no such thing as declining a confirmed reservation. If the reservation is confirmed, you would be cancelling, not declining, which carries heavy penaties for the host.