Question

Which of the following makes a true statement about the relationship between government and financial institutions?

A.Government and financial institutions do not interact with each other.
B.Financial institutions like the U.S. Treasury must approve increases in the government deficit.
C.Government can pass laws to limit what financial institutions can charge in interest and fees.
D. Financial institutions like local banks must approve interest rates set by the Federal Reserve.

Answer 1

C.Government can pass laws to limit what financial institutions can charge in interest and fees.

Answer 2

The correct answer is C) Government can pass laws to limit what financial institutions can charge in interest and fees.

A true statement about the relationship between government and financial institutions is "Government can pass laws to limit what financial institutions can charge in interest and fees."

The Federal Reserve is the Central Bank of the United States. Its function is to regulate the monetary system; the print and distribution of money in the nation. Its goal is to maintain the growth of the economy.

On the part of the government, the Department of Treasury influences the fiscal policy, regulates imports and exports, collect taxes. Its two arms are the office of Comptroller of the Currency and the Office of Thrift Supervision. This way, the government can pass laws to limit what financial institutions can charge in interest and fees and help the economy of the citizens.