An example of an externality is a situation where a bank opens a new office, and that new office causes deposits in the bank's other offices to increase.

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.