10. The aggregate demand (AD) curve relates the aggregate quantity of output demanded-the level of output at the intersection of the IS and LM curves-to the price level. An increase in the price level reduces the real money supply and shifts the LM curve up and to the left, thereby reducing the aggregate quantity of out- put demanded. Because an increase in the price level reduces the aggregate quantity of goods demanded, the aggregate demand curve slopes downward. Factors that increase the aggregate quantity of output demanded at a given price level, such as increases in government purchases or the money supply, shift the AD curve up and to the right.