Answer:
The Fed uses open market operations as its primary tool to influence the supply of bank reserves. ... The federal funds rate is sensitive to changes in the demand for and supply of reserves in the banking system, and thus provides a good indication of the availability of credit in the economy.
Step-by-step explanation:
The Fed uses open market operations as its primary tool to influence the supply of bank reserves. ... The federal funds rate is sensitive to changes in the demand for and supply of reserves in the banking system, and thus provides a good indication of the availability of credit in the economy.