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Open market operations help the Fed act as the lender of last resort and prevent banking panics. True False If the federal funds rate is

Open market operations help the Fed act as the lender of last resort and prevent banking panics.

True

False

If the federal funds rate is above the interest rate paid on reserves, then there is an arbitrage opportunity: banks will borrow at the discount rate and lend out at the federal funds rate.

True

False

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