Lauren Schroth’s
AP Government
Exam Review Project
D EVOLU T I ON
FI SCA L POLI CY
G RA N T I N A I D
CAT EG ORI CA L G RA N T S
B LOCK G RA N T S
Devolution
 Devolution is the current effort to scale back the size and
activities of the national government and to shift responsibility
for a wide range of domestic programs from Washington to the
states. In recent years these areas have included welfare, health
care, and job training.
 Devolution is the transfer of power from a central government to
sub national (e.g., state, regional, or local) authorities.
 Throughout history, there has been a tendency for governments to
centralize power. During the late 20th century, however, groups in
both federal and unitary systems increasingly sought to reduce the
power of central governments by devolving power to local or
regional governments. For example, supporters of states’ rights in
the United States favored diffusing power away from Washington,
D.C., toward state and local governments. This trend was also
experienced throughout the world, though perhaps the two most
notable instances of devolution occurred in France in the 1980s
and the United Kingdom in the late 1990s.
Fiscal Policy
 Fiscal policy is an attempt to use taxes and expenditures to affect
the economy
 Fiscal policy is the means by which a government adjusts its levels of
spending in order to monitor and influence a nation's economy. It is
the sister strategy to monetary policy with which a central bank
influences a nation's money supply. These two policies are used in
various combinations in an effort to direct a country's economic goals.
Here we take a look at how fiscal policy works, how it must be
monitored and how its implementation may affect different people in
an economy.
 Before the Great Depression in the United States, the government's
approach to the economy was laissez faire. But following the Second
World War, it was determined that the government had to take a
proactive role in the economy to regulate unemployment, business
cycles, inflation and the cost of money. By using a mixture of both
monetary and fiscal policies (depending on the political orientations
and the philosophies of those in power at a particular time, one
policy may dominate over another), governments are able to control
economic phenomena.
Grant In Aid
 Grant-in-aid are federal funds provided to states and
localities. Grants-in-aid are typically provided for airports,
highways, education, and major welfare services.
 A grant-in-aid is money coming from central government for
a specific project. This kind of funding is usually used when
the government and parliament have decided that the
recipient should be publicly funded but operate with
reasonable independence from the state.
 A grant-in-aid is funds allocated by one level of government
to another level of government to be used for specific
purposes. Such funds are usually accompanied by
requirements and standards set by the governing body for
how they are to be spent. An example of this would be how
the United States Congress required states to raise the
drinking age for alcohol from 18 to 21 in order for the
individual states to continue to qualify for federal funds for
interstate highways located within each state.
Categorical Grants
 A categorical grant is one for a specific purpose defined by
federal law: to build an airport or a college dormitory, for
example, or to make welfare payments to low-income mothers.
Such grants usually require that the state or locality put up
money to “match” some part of the federal grant, though the
amount of matching funds can be quite small.
 Categorical grants are grants, issued by the United States
Congress, which may be spent only for narrowly-defined purposes.
Additionally, recipients of categorical grants are often required to
match a portion of the federal funds. About 90% of federal aid
dollars are spent in categorical grants.
 Categorical grants are the main source of federal aid to state and
local government, can only be used for specific purposes and for
helping education, or categories of state and local spending.
Categorical Grants, cont.
 During the development of the Interstate Highway System,
congressional grants provided roughly 90% of the funding.
Categorical grants may be spent only for narrowly defined
purposes and 33% of categorical grants are considered to be
formula grants. More examples of categorical grants include
Head Start, the Food Stamp Program, and Medicaid.
 This type of grant differs from block grants in that block grants
are issued in support of general governmental functions such as
education or law enforcement. State and local recipients have
more leeway in determining how best to use the money.
 Governors and mayors complain about these categorical grants
because their purposes were often so narrow that it was
impossible for a state to adapt federal grants to local needs.
One response to this problem was to consolidate several
categorical grants into a single block grant devoted to some
general purposes…with fewer restrictions on its use.
Block Grants
 Block grants are grants of money from the federal government to
states for programs in certain general areas rather than specific
kinds of programs. Allowed devotion for a general purpose with
fewer restrictions.
 The Federal government awards block grants to state or local
governments, in a lump sum for a specific issue or problem.
 The local/state governments set up more specific granting
guidelines within their own jurisdictions, for making smaller grants
to various agencies and nonprofits. The local government creates
and manages a process to identify local needs and for coordinating
the grant making process, monitoring and evaluating the
outcomes.
 For Example:
The federal government has awarded many block grants to states for
drug addiction education.
The End
 Have fun taking the AP Government Exam!
#13 Free-Response Question
Free Response
 The figure above demonstrates that proportions of elderly and children have
moved in opposite directions over time. The distribution of government benefits
for the elderly has gone up; while the children proportion of spending has gone
down. This change in distribution of government benefits between children and
the elderly has been affected by a number of things. First, there was a recent
rising in the elderly population and a shrinking in birth rates that caused the
government to pay closer attention to the elderly. With a sufficient adult
population the government needed to change its focus from child to adult.
Furthermore, an increased life expectancy helped continue to push the need for
the elderly to receive government benefits over time. Lastly, children cannot
vote and are generally not politically organized; thus, politicians need to spend
more time and money on the elderly because the elderly are the ones who vote.
As the elderly population increases, an increasing number of elderly start
receiving benefits. Mostly, those who receive benefits exert pressure on
politicians or fund interest groups. Continuing, since the elderly vote there is a
lot of pressure to appeal to them. Politicians are looking to gain election and the
only way they will be able to do this is by appealing to the elderly population.
When the government gives more benefits to the elderly they can ensure that
they have won their vote.