 Money supply in effect is perfectly inelastic with respect to nominal interest rates.Thus the money supply function is represented as a vertical line – money supply is a constant, independent of the interest rate, GDP, and other factors.Mathematically, the LM curve is defined by the equation formula_4, where the supply of money is represented as the real amount "M"/"P" (as opposed to the nominal amount "M"), with "P" representing the price level, and "L" being the real demand for money, which is some function of the interest rate and the level of real income.