The Harrod-Domar Model is an economic theory that explains how investment can lead to economic growth. It suggests that the level of investment in an economy is crucial for increasing output and employment. According to the model, higher investment leads to more production, which in turn creates jobs and boosts income. This model emphasizes the relationship between savings, investment, and economic growth. It posits that for an economy to grow, it must invest a certain percentage of its output. If the investment rate is higher than the required rate, the economy will expand; if not, it may stagnate or decline.