Assume that Brazil has a constant money supply and that it devalues its currency. The monetary approach to devaluation reasons that one of the following tends to occur for Brazil.
a. Domestic prices rise, the purchasing power of money falls, and consumption falls.
b. Domestic prices rise, the purchasing power of money rises, and consumption rises.
c. Domestic prices fall, the purchasing power of money rises, and consumption falls.
d. Domestic prices fall, the purchasing power of money rises, and consumption rises.

The monetary approach to devaluation reasons that "A: Domestic prices rise, the purchasing power of money falls, and consumption falls" tends to occur for Brazil. .

According to the monetary approach to devaluation, when a country devalues its currency, it leads to an increase in domestic prices. As a result, the purchasing power of money decreases, meaning that the same amount of money can buy fewer goods and services. This decline in purchasing power typically leads to a decrease in consumption as individuals find it more expensive to purchase goods and may need to reduce their spending.

Therefore, option A correctly represents the expected outcome of devaluation according to the monetary approach: domestic prices rise, the purchasing power of money falls, and consumption falls.

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