Final answer:
The federal funds rate is the interest rate banks charge each other for overnight lending, while open market operations involve the purchase and sale of treasury and mortgage-backed securities with dealers.
Step-by-step explanation:
The term that matches the definition of 'The interest rate banks charge each other for overnight lending' is the federal funds rate. This rate is set by the Federal Reserve and serves as a benchmark for short-term interest rates in the economy. Banks use this rate to borrow funds from one another to meet their reserve requirements or to lend to businesses and individuals.
The term that matches the definition of 'The purchase and sale of treasury and mortgage-backed securities with dealers' is open market operations. The Federal Reserve conducts open market operations by buying or selling these securities to influence the money supply and interest rates in the economy.
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