Let's look a Kruman's post on the subject, he is very good at explaining things. Don't worry if GDP appears as Y in the graphs shown bellow. They are equivalent concepts.
Now that you should have a grasp of the IS-LM model let's see what happens when the LM curve is flat or vertical and a fiscal stimulus pushes the IS curve up and to the right.
In the figure on the left bellow the economy is doing very well and the demand for money is only depending on Y (GDP) and not on the interest rate i. People are using money mostly for transactions. A stimulus comes and moves the IS curve to IS' resulting in a new point of equilibrium, but because the LM curve is vertical Y stays the same while the interest rate moves from i to i', that is it goes up. Under this scenario the stimulus was offset by a fall in private expenditure. The crowding up effect. - Government borrowed at the expense of the private sector.
On the graph on right the LM curve is flat for the reason already explained by Krugman under the designation of liquidity trap.
Under that second scenario when the IS curve moves to the right Y moves to Y' while interest rates stay the same.
Hopefully you should be now in position to understand this:
