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Question

What is the meaning of the term 'taper tantrum' used in monetary policy discussions?

A Creating fiscal deficit to increase money supply Correct Answer Incorrect Answer
B Increasing the money supply in the economy by the Federal Reserve Correct Answer Incorrect Answer
C Neutral Monetary Policy stance by Federal Reserve with increase in the policy rates Correct Answer Incorrect Answer
D Gradual withdrawal from the policy of feeding money into the economy Correct Answer Incorrect Answer
E Accommodative monetary policy by the central bank Correct Answer Incorrect Answer

Solution

Taper tantrum is the term used for the 2013 surge in U.S. Treasury yields, which resulted from the Federal Reserve's use of tapering to gradually reduce the amount of money it was feeding into the economy.

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