why does the lm curve slope upward 
the lm curve slopes upward because a higher gross domestic product gdp causes greater demand to hold money for transactions this in turn raises interest rates so that money supply and liquidity can stay in equilibrium who developed the is lm model a british economist named john hicks developed the is lm model in 1936 basing it on theories published by another british economist john maynard keynes only a few months earlier the bottom linethe is lm model is a tool for looking at how the market for economic goods intersects with the loanable funds market it depicts the short term equilibrium point between interest rates and output with its three variables being liquidity investment and consumption because it is a highly simplistic device it is only useful when snap decisions must be made as it lacks the sophistication necessary for setting tax and spending policies 