Final answer:
Categorical grants are specific federal funds with strict guidelines for use, limiting how recipients can spend the money, and often require state matching funds.
Step-by-step explanation:
Categorical grants are allocations of federal funds targeted at state and local spending for specific purposes defined by federal law. Unlike block grants, categorical grants come with stringent administrative criteria and often require matching funds from the states.
Programs like Medicaid and food assistance are examples of categorical grants, which aim to ensure that federal money supports national objectives.
These grants can also be used for emergency funding in situations like natural disasters. Categorical grants provide lesser flexibility to states compared to block grants, which have fewer restrictions and grant recipients more latitude over how to spend the funds.