Monetary or Fiscal Policy?

Question

I'm having some trouble identifying these three scenarios and I need to know if it’s monetary or fiscal policy. In addition, I need to know if it’s contractionary or expansionary so I can have an idea how the LM or IS curves are shifting.

1.) The government increases expenditures without increasing taxes or the money supply (I know this is fiscal policy but I’m not sure how the LM and IS curves are reacting)

2.) The government raises expenditures by issuing T-Bills and selling them to Fed

3.) As a result of a government budget surplus, some of it was returned to tax payers through an income tax cut.

If anyone could tell for any of these scenarios how the LM and IS curve are shifting, I would greatly appreciate it.

Answer 1

1) Expansionary fiscal policy, so no shifts in LM

Increase in G will shift IS outward increasing both, interest rate and output.

It will press toward gov budget deficit too.

2) Expansionary fiscal policy (gov rises expenditures), and contactionary Monetary policy (issues T-Bills).

Increase in G will shift IS outward but selling T-Bills reduces M1 thus causing inward shift of LM.

Effects on output (GDP) and interest rate depends on size of shifts and curves orientations/forms

3) Expansionary fiscal policy (tax-cut), so no shifts in LM

It will increase output thus IS will shift outward increasing both, interest rate and output.