The graph shows the income and real interest rates. The shape can be a negative slope or steep or flat and the steepness helps in determining the impact of government policies, corporate governance, and liquidity.
If the demand is sensitive to the rate – a decline in the interest can cause changes in the patterns of commodity production and consumption, which can affect the national revenue. In such conditions the graph is flat.
A downward slope depicts a declining rate and demand increasing which can amplify consumption and national income, and it helps the product to grow. Overall the curve shows the transformation in the basic variables used in calculating GDP.