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 indicates a slowing economic growth rate because tax revenues, especially from corporate profits and personal income, typically contract faster than the overall GDP during a downturn. Statement 2 is incorrect because the ratio measures the government's fiscal reach relative to the economy's size, whereas the distribution of national income is a structural issue measured by indicators like the Gini coefficient. This question tests the core concept of **tax buoyancy**, which refers to the responsiveness of tax revenue growth to changes in the GDP.