The LM curve shifts right (left) when the money supply (real money balances) increases (decreases). It also shifts left (right) when money demand increases (decreases). … Then imagine a fixed MS and a shift upward in money demand, leading to a higher interest rate, and vice versa.

Does income shift LM curve?

Shifts of the LM Curve:

Income consequently rises. Similarly an increase in the demand for money, for instance, raises the rate of interest by shifting the LM curve leftward (Fig. 16); investment falls and so income.

Is-LM a schedule?

The IS-LM graph consists of two curves, IS and LM. Gross domestic product (GDP), or (Y), is placed on the horizontal axis, increasing to the right. The LM curve depicts the set of all levels of income (GDP) and interest rates at which money supply equals money (liquidity) demand.

Any change (decrease in government consumption, increase in taxes, decrease in consumer confidence – proxied by c0) that, for a given interest rate, decreases the demand for goods creates a shift of the IS curve to the left.