In practice,the Fed has been able to totally offset all spending shocks by changing the growth rate of the money supply.

Question

Quizplus · Accepted Answer

While the Fed can use monetary policy tools to try to mitigate the effects of spending shocks, it is not always possible to completely offset them. Factors such as the timing and magnitude of the shock, as well as other economic conditions, can impact the effectiveness of monetary policy.

In Practice,the Fed Has Been Able to Totally Offset All