Multiple Choice
When a salesperson calls you to sell a cemetery plot, this is most likely an example of which type of good?
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8. The Types of Goods
Public Goods: Demand Curve and Optimal Quantity
Multiple Choice
Which of the following best describes a grant given by the federal government to a state for a specific purpose in the context of public goods?
A
A lump-sum tax
B
A block grant
C
A categorical grant
D
A matching grant
Verified step by step guidance1
Understand the concept of grants in the context of federal government transfers to states. Grants are funds provided by the federal government to state or local governments to finance specific or general activities.
Identify the types of grants: A lump-sum tax is not a grant but a tax; a block grant is given for broad purposes with fewer restrictions; a matching grant requires the state to contribute funds to receive federal money; a categorical grant is given for a specific purpose with strict guidelines.
Recall that public goods often require targeted funding to ensure they are provided efficiently and meet federal standards, which is why the federal government uses categorical grants for specific purposes.
Match the description in the problem — a grant given for a specific purpose — with the correct type of grant, which is a categorical grant.
Conclude that the best description of a grant given by the federal government to a state for a specific purpose in the context of public goods is a categorical grant.
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