the answer is A. Imperfecto progresivo.
The progressive imperfect is used to express something that was taking place in the past. It is formed using the verb to be in past (in this case: estaba) plus the verb ending in ing (ando, endo, in this case: cantando). It is mainly used for: on-going actions that were happening in the past.
Do you have the work sheet cause i think that would help alot on treying to solve your question
The correct answer is dice.
•Por qué dice él gracias?
You are going to use the word dice to fill the blank because is the correct conjugation in the sentence.
On English the sentences should be:
Why does he says thank you?