A decrease in tax to GDP ratio of a country indicates which of the following? 1. Slowing economic growth rates 2. Less equitable distribution of national income Select the correct answer using the code given below.
You are correct. A decrease in the tax-to-GDP ratio of a country typically indicates slowing economic growth rates. A lower tax-to-GDP ratio means that the government is collecting a smaller share of the overall economic output in the form of taxes, which can be an indication of a slowdown in economic activity. It does not necessarily imply anything about the equitable distribution of national income. So, the correct answer is 1 only.