Here is an article from the Bakers Evangelical Dictionary of Biblical Theology. It discusses the subject of Grace and comes to the conclusion that Grace is more than just God's mercy but is also His Holy Spirit. God's free Grace both Justifies and transforms the person of faith into a person who is zealous of good works. 

Hebrews 4:16 "Let us then with confidence draw near to the throne of grace, that we may receive mercy and find grace to help in time of need."