54. 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 incomeSelect the correct answer using the code given below.
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2Official answer key says option A is correct. Can someone provide the rationale. I am unable to understand how it could be A.
I also thought both true.. But@eclectus explanation looks convincing. we can think like tax to gdp ratio is 10 percent. Out of this assume 50% tax paid by Ambani and Adanis only. Ratio wont reflect only these people contribution as it is percent quantitatively. However if it is low ratio then ambani also losing money so growth lowering