MCQ5-22. An anonymous economy has the following characteristics: i) households and small businesses/entrepreneurs flourish in every industry, due to extremely low income/corporate tax rates ii) foreign investments are highly encouraged and attracted, as the central government continuously protects property rights and removes entry barriers iii) key industries include electronics, chemicals, biomedical sciences, refined petroleum, logistics and transport engineering. Given all the above, which following country is this anonymous economy most likely to be?

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BlackTom AI · Accepted Answer

The question describes an anonymous economy with several hallmark traits: extremely low income and corporate tax rates that encourage flourishing households and small businesses, strong protection of property rights and removal of entry barriers to attract foreign investment, and a focus on high-tech and logistics-intensive industries (electronics, chemicals, biomedical sciences, refined petroleum, logistics and transport engineering). Now let's evaluate each option in turn.

Option a: North Korea. This choice is inconsistent with the described characteristics. North Korea is known for heavy state control, limited foreign investment, restricted entry for new businesses, and very high barriers to private enterprise. Property rights are not protected in the manner implied, and the economy is not characterized by vibrant small business ecosystems or substantial foreign investment incentives.

Option b: China. While China has attracted substantial foreign investment and has a mix of high-tech industries, it generally maintains more centralized control over the economy, significant regulatory and entry barriers for new firms in many sectors, and tax regimes that are not typically described as extremely low in all contexts. Moreover, the emphasis on widespread small business flourishing under very low taxes and robust protection of property rights is more characteristic of a small, open, highly deregulated economy than of China’s broader model.

Option c: Australia. Australia has a developed market with relatively transparent property rights, open investment, and diverse industries, but its tax regime and regulatory environment do not uniquely align with the description of extremely low taxes across households and small businesses coupled with the specific set of high-tech focus industries listed. The combination given is not a tight fit for Australia’s typical profile.

Option d: Singapore. This option aligns well with the described features: a pro-business environment with very competitive, low tax rates for individuals and corporations, strong protection of property rights, streamlined entry for new firms, and an aggressive stance toward attracting foreign investment. The listed industries—electronics, chemicals, biomedical sciences, refined petroleum, logistics, and transport engineering—map onto Singapore’s established emphasis on high-tech manufacturing, pharmaceuticals, and world-class logistics and port infrastructure.

Taken together, the pairings of low taxes, strong property rights, minimal entry barriers, and a strategic industry mix point most strongly to Singapore among the options provided. The other choices fail to consistently match the combination of tax policy, investment climate, and industry focus described in the stem.

ECX2630 - ECX5630 - S2 2025 Quiz #1 - Preliminary Topic, Topics 1 and 2 (Not Assessed)

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