Why would an increase in government spending shift the IS curve and not the LM curve?
The LM curve equates the supply of money and the demand for money. If real GDP increases, then demand for money increases, while if real interest rates increase, the demand for money decreases: the LM curve gives the of real interest rate that is necessary to keep the demand for money equal to the supply of money for a given level of real GDP.
The LM curve moves when the price level changes. An increase in government spending will not, by itself, change the price level, so it won’t move the LM curve.
and alwyas remember
(S-I) = (G-T) + (X-M)
Increase in government spending is a part of Fiscal deficit and it moves up income, interest rate,money demand( And as it will not effect liquidity margin).Moneatry policy usually effects LM curve.