The formula of lm curve is m = ky-HR. LM curve is a curve used to describe the relationship between national income and interest rate in the equilibrium state of money market.

LM curve shows the trajectories of various combinations of income and interest rate when the money supply in the money market equals the money demand. The mathematical expression of LM curve is M/P=KY-HR, and its slope is positive.

LM curve is a curve described by different combinations of equilibrium income and equilibrium interest rate that make the money market in equilibrium. In other words, on the LM curve, each point represents the combination of income and interest rate, and these combination points just make the money market in an equilibrium state.

LM equation

1, conditions of money market equilibrium:

MD = ms

2. Establishment of 2.LM equation

MD = ms

MD = L 1(Y) + L2(r)

L 1(Y) = kY