1.The Harrod-Domar model has the following simple production function y = Ak. Assume that there is some level of income (let's say poverty line yp) which people need to consume in order to survive. We define discretionary income as yd =y - yp if the income is above the poverty line and equal to zero if it is below. We also assume that individuals save a constant share of their discretionary income. In other words

sy = y-yd (i.e., there is no saving if income y is below yp). Assume that the rate of depreciation of capital is delta() and that there is no population growth.

What is the policy implication of this model? Elaborate briefly.