Question

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

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

Answer 1

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

Answer: Option C

Step-by-step explanation:

In the U.S.A, the Federal Reserve is the Central Bank of the nation. The main responsibilities of the bank include printing and circulation of the currency such that it helps in the maintenance of the growth of the economy.

It is controlled by the Department of Treasury, which also helps in the formation of fiscal policies. Through this, the government can pose rules to limit the charges of interest and fee by financial institutions.