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A decrease in tax to GDP ratio of a country indicates which of the following?
1. Slowing economic growth rate
2. Less equitable distribution of national income

Select the correct answer using the code given below:
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2



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When the tax to GDP ratio of a country decreases, it primarily indicates a slowing economic growth rate. A decrease in the tax to GDP ratio suggests that tax revenue is growing at a slower pace compared to the growth of the economy. This can be an indication of a sluggish economy where tax collections are not keeping up with the overall economic expansion.

The second statement, "Less equitable distribution of national income," is not directly related to the tax to GDP ratio. While a decrease in the tax to GDP ratio might have implications for income distribution, it is not a direct measure or indication of income inequality.


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