Explanation:

The tax-to-GDP ratio is a measure of a nation's tax revenue relative to its size of its economy as measured by gross domestic product (GDP).  This ratio is used with other metrics to determine how well a nation's government directs its economic resources via taxation. Developed nations typically have higher tax-to-GDP ratios than developing nations.

• Higher tax revenues mean a country is able to spend more on improving infrastructure, health, and education—keys to the long-term prospects for a country’s economy and people.

• In the short term (the next one or two years), cutting taxes is an effective way to boost demand in an economy. 

• In the long term, tax reductions can induce people to work more, bring more low-skilled workers into the labor force,  encourage saving, cause companies to invest domestically (rather than internationally), and encourage the creation of new ideas through research. However, tax reductions in the long term can also slow economic growth by increasing deficits. In addition, if tax cuts increase workers’ after-tax income, they may choose to work less, and this can negatively impact supply.

• However, historical data reveals that higher taxes are compatible with economic growth and job creation. If policymakers use the revenue from tax increases on reducing budget deficits, it can be very positive for the economy.

Hence option 4th is correct.