Final answer:
Block grants are broad federal grants to states with minimal restrictions, allowing flexibility in how the funds are used, contrasting with coercive 'carrot and stick' funding methods.
Step-by-step explanation:
When states are given broad grants for prescribed activities with little or no strings attached, these are known as block grants. Unlike categorical grants that are strictly meant for specific programs and come with tight federal controls and mandates, block grants provide states with greater flexibility to allocate funds as they see fit to meet local needs. This approach aligns with the concept of federalism, which acknowledges the sovereignty of states to make decisions on resource allocation that best suit their citizens' needs.
The introduction of block grants was particularly emphasized during Ronald Reagan's presidency in the 1980s when fiscal federalism took a turn towards giving more financial decision-making power back to the states. The idea was that states were better positioned to understand and manage the allocation of resources on a local level, rather than having a central government mandate how the funds should be used. This method of funding is sometimes in contrast to the "carrot and stick" approach of coaxing states to follow federal mandates through financial incentives or penalties.