Money granted by the federal government to the states for a narrow purpose, such as a specific program, is called a ...

• A. Block grant
• B. General grant
• C. Categorical grant
• D. Formula grant

Answer: (C)

Money granted by the federal government to the states for a narrow purpose is a categorical grant. The key idea is that these funds come with specific rules and are earmarked for a particular program or area, with strings attached such as reporting requirements and sometimes matching funds to ensure the money is used for that defined purpose. Block grants, in contrast, give states broader discretion to decide how to spend within a general area, with fewer strings. While there are also formula grants within the categorical category, the defining feature here is the narrowly targeted, program-specific nature of the funding.