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 decrease in the tax-to-GDP ratio of a country indicates that the rate of growth of tax collections is slower than the rate of growth of the Gross Domestic Product (GDP). This can indeed be a sign of a slowing economic growth rate, as a sluggish economy might lead to lower incomes, reduced consumption, and thus, lower tax revenues relative to the overall economic output. It could also point to inefficiencies in the tax collection system or tax avoidance. However, a decrease in the tax-to-GDP ratio does not directly indicate less equitable distribution of national income. Income distribution is typically measured by indicators like the Gini coefficient or income quintiles, which assess how income is spread across different segments of the population, independent of the overall tax collection efficiency relative to GDP.