4. For any level of output, the LM curve identifies the real interest rate that equates the quantities of money supplied and demanded and, thus, clears the asset market. The LM curve slopes upward because an increase in output raises money demand, implying that a higher real interest rate is needed to clear the asset market. With output fixed, any change that reduces the money supply relative to money demand increases the real interest rate that clears the asset market and causes the LM curve to shift up and to the left