Best affordable summer vacations for A shock to money demand simply means that the demand for real balances has changed suddenly and unexpectedly. Of course, in the absence of a monetary policy response this implies that interest rates in the economy will change. Accordingly, when interest rates change, spending and thus real output may change. To the extent that the Federal Reserve responds to money demand shocks, then the Federal Reserve may be an important player in the business cycle. Additionally, the Federal Reserve may set into motion a chain of events that will lead to an increase or decrease in the nation’s money supply. Doing so affects interest rates and thus spending and output. A monetary system specifies how people pay each other when they conduct transactions. Best affordable summer vacations 2016.