Why did countries drop their tax rates sharply when the Soviet Union split apart in 1990?

To overcome financial difficulties.
To attract international capital.
To avoid capital disruption.
To cut government spending.

Correct answer: To attract international capital.

Solution

The passage states that countries in Eastern Europe cut tax rates sharply to attract global capital after the Soviet Bloc collapsed. This was done to bring in investment and help their economies recover. Hence, the correct answer is to attract international capital.

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