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A decrease in tax to GDP ratio of a country indicates which of the following

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

Answer:

(a)

Core Books/NCERT

Explanation

Slowing economic growth rates may result in lower tax collection.Tikdam: Controversial question it depends on tax buoyancy but geneally as economy slows, tax to GDP ratio also declines Statment 2 can also be proved to be both true and false in different scenraios