If one of the nation's leading banks raises the prime rate of interest by a half of a percent,and within 24 hours all of the other U.S.banks raise their prime rates by the same percentage,this behavior would be

Question

Quizplus · Accepted Answer

This is an example of price leadership, where one leading bank sets the precedent for other banks to follow suit and raise their prime rates. It is not an example of covert collusion, as there is no agreement or communication between the banks to raise their rates. It is also not proof of a U.S. bank cartel or illegal cutthroat competition.

If One of the Nation's Leading Banks Raises the Prime