Monetary Policy – UGC NET History – Practice Questions

Monetary Policy

1. Which among the following was the primary objective of monetary policy during British India?
A. Industrial development of India
B. Exchange rate stability and facilitation of colonial trade
C. Welfare-oriented credit expansion
D. Agricultural modernization

2. The Coinage Act of 1835 introduced which of the following in British India?
A. Gold Mohur as standard currency
B. Sterling currency system
C. Copper currency as legal tender
D. Uniform silver rupee throughout British territories

3. Match List I with List II regarding monetary developments in British India:

A. A-III, B-I, C-IV, D-II
B. A-III, B-I, C-II, D-IV
C. A-II, B-III, C-IV, D-I
D. A-I, B-IV, C-II, D-III

4. Assertion (A): India initially followed the silver standard during British rule.
Reason (R): Silver was abundant and widely accepted in Asian trade networks.

A. Both A and R are true, and R is the correct explanation of A.
B. Both A and R are true, but R is not the correct explanation of A.
C. A is true, but R is false.
D. A is false, but R is true.

5. The silver rupee introduced under the Coinage Act of 1835 weighed:
A. 10.25 grams of silver
B. 12.40 grams of silver
C. 11.66 grams of silver
D. 13.75 grams of silver

6. Which committee recommended the closure of mints to free coinage of silver in 1893?
A. Hilton Young Commission
B. Chamberlain Commission
C. Fowler Committee
D. Herschell Committee

7. Match List I with List II regarding currency features:

A. A-II, B-I, C-III, D-IV
B. A-I, B-II, C-IV, D-III
C. A-III, B-IV, C-I, D-II
D. A-IV, B-I, C-II, D-III

8. During British India, the exchange rate policy mainly benefited:
A. Indian peasants
B. British trade and Home Charges remittance
C. Indian industrialists
D. Cooperative credit institutions

9. Assertion (A): The fall in silver prices after 1873 adversely affected India’s external trade position.
Reason (R): Depreciation of the rupee complicated payment of Home Charges to Britain.

A. Both A and R are true, but R is not the correct explanation of A.
B. Both A and R are true, and R is the correct explanation of A.
C. A is true, but R is false.
D. A is false, but R is true.

10. Which among the following Acts granted monopoly of paper currency issuance to the colonial government?
A. Currency Act of 1899
B. RBI Act of 1934
C. Paper Currency Act of 1861
D. Indian Coinage Act of 1906

11. The Gold Exchange Standard adopted in India in 1898 linked the rupee to:
A. French Franc
B. US Dollar
C. Gold coins circulating domestically
D. British pound sterling

12. Match List I with List II regarding institutions and functions:

A. A-I, B-II, C-IV, D-III
B. A-IV, B-I, C-II, D-III
C. A-II, B-I, C-III, D-IV
D. A-III, B-II, C-I, D-IV

13. Which of the following best describes the monetary system before 1835 in India?
A. Fragmented system with local coinages
B. Fully centralized paper currency system
C. Gold bullion-based economy
D. Rupee linked to sterling

14. Assertion (A): Gold coins circulated widely under India’s gold exchange standard.
Reason (R): India maintained gold reserves abroad instead of domestic gold circulation.

A. Both A and R are true, and R explains A.
B. Both A and R are true, but R does not explain A.
C. A is true, but R is false.
D. A is false, but R is true.

15. Which among the following was NOT a feature of colonial monetary policy?
A. Exchange stability
B. Developmental credit for Indian agriculture
C. Facilitation of imperial trade
D. Revenue generation

16. During World War I, shortage of silver led to:
A. Abolition of rupee coinage
B. Introduction of token coins and small denomination notes
C. Adoption of gold coin circulation
D. Nationalization of RBI

17. Match List I with List II regarding commissions and recommendations:

A. A-I, B-II, C-IV, D-III
B. A-II, B-I, C-III, D-IV
C. A-IV, B-II, C-I, D-III
D. A-III, B-IV, C-II, D-I

18. The rupee was revalued in 1920 to:
A. 1 shilling
B. 1 shilling 4 pence
C. 2 shillings
D. 3 shillings

19. Assertion (A): RBI was established under the RBI Act of 1934.
Reason (R): It became the central authority for issuing currency and regulating credit.

A. Both A and R are true, and R is the correct explanation of A.
B. Both A and R are true, but R is not the correct explanation.
C. A is true, but R is false.
D. A is false, but R is true.

20. The first official Government of India paper notes were issued in:
A. 1835
B. 1861
C. 1899
D. 1935

21. Match List I with List II regarding wartime monetary developments:

A. A-I, B-II, C-IV, D-III
B. A-II, B-IV, C-I, D-III
C. A-III, B-I, C-II, D-IV
D. A-II, B-I, C-III, D-IV

22. The headquarters of RBI was initially located at:
A. Bombay
B. Delhi
C. Calcutta
D. Madras

23. Which among the following best explains “Sterling Balances”?
A. Gold reserves held in India
B. Private deposits of British officers
C. Wartime credits held in Britain on behalf of India
D. Rural cooperative funds

24. Assertion (A): Monetary expansion during World War II caused inflation in India.
Reason (R): Currency printing increased dramatically to finance war expenditure.

A. Both A and R are true, but R is not the correct explanation.
B. Both A and R are true, and R is the correct explanation.
C. A is true, but R is false.
D. A is false, but R is true.

25. The Currency Reserve Fund consisted of:
A. Gold, silver, and government securities
B. Only gold reserves
C. Private bank deposits
D. Agricultural surplus

26. Which among the following institutions largely dominated rural credit during colonial rule?
A. RBI and NABARD
B. Moneylenders and zamindars
C. Cooperative banks only
D. Industrial credit corporations

27. Match List I with List II regarding standards:

A. A-II, B-I, C-III, D-IV
B. A-I, B-II, C-IV, D-III
C. A-IV, B-III, C-II, D-I
D. A-III, B-IV, C-I, D-II

28. Which British monarch’s image appeared on post-1835 rupee coins?
A. Only Queen Victoria
B. Only King George V
C. Indian rulers alongside British monarchs
D. The reigning British monarch of the period

29. Assertion (A): Colonial monetary policy prioritized employment generation.
Reason (R): The British government sought welfare-oriented economic planning in India.

A. Both A and R are true.
B. A is true, but R is false.
C. A is false, but R is true.
D. Both A and R are false.

30. Which among the following best characterizes British India’s monetary regime?
A. Welfare-oriented and expansionary
B. Exchange stability-focused and colonial in orientation
C. Fully decentralized banking system
D. Agriculture-centered monetary expansion

31. Match List I with List II regarding monetary legislation in British India:

A. A-I, B-II, C-IV, D-III
B. A-II, B-III, C-I, D-IV
C. A-III, B-IV, C-II, D-I
D. A-IV, B-I, C-III, D-II

32. Which of the following became legal tender under the Currency Act of 1899?
A. Gold Mohur
B. Copper coinage
C. Indian rupee as token currency
D. British pound sterling

33. Assertion (A): The gold standard became dominant in Europe during the nineteenth century.
Reason (R): India resisted immediate adoption because silver dominated Asian trade.

A. Both A and R are true, and R is the correct explanation of A.
B. Both A and R are true, but R is not the correct explanation.
C. A is true, but R is false.
D. A is false, but R is true.

34. Which among the following led to the depreciation of the rupee after 1873?
A. Increase in gold production in India
B. Global decline in silver prices
C. Introduction of RBI
D. Decline in British exports

35. Match List I with List II regarding wartime consequences:

A. A-I, B-II, C-III, D-IV
B. A-II, B-I, C-IV, D-III
C. A-II, B-III, C-I, D-IV
D. A-IV, B-II, C-I, D-III

36. Which body controlled monetary policy in India before RBI was established?
A. Supreme Court of India
B. Presidency Banks alone
C. Indian National Congress
D. Finance Department and Currency Department of Government of India

37. Which of the following statements regarding Presidency Banks is correct?
A. They lost note issuance powers after the Paper Currency Act of 1861.
B. They established RBI in 1935.
C. They issued sterling currency only.
D. They controlled rural credit.

38. Assertion (A): RBI initially functioned as a shareholder-owned institution.
Reason (R): It was nationalized only in 1949.

A. Both A and R are true, but R is not the correct explanation.
B. Both A and R are true, and R is the correct explanation.
C. A is true, but R is false.
D. A is false, but R is true.

39. During World War I, the rise in silver prices resulted in:
A. Rupee appreciation against sterling
B. Establishment of RBI
C. Hoarding and melting of silver coins
D. Introduction of gold circulation

40. Which among the following was recommended by the Chamberlain Commission (1920)?
A. Silver standard
B. Complete gold coin circulation
C. Sterling reserve abolition
D. Gold bullion standard

41. Match List I with List II regarding institutions and headquarters/functions:

A. A-II, B-I, C-III, D-IV
B. A-I, B-II, C-IV, D-III
C. A-IV, B-III, C-I, D-II
D. A-II, B-IV, C-III, D-I

42. The rupee under the gold exchange standard was pegged at:
A. 1 rupee = 2 shillings
B. 1 rupee = 1 shilling 4 pence
C. 1 rupee = 1 pound
D. 1 rupee = 3 shillings

43. Assertion (A): India circulated gold coins extensively under the gold exchange standard.
Reason (R): Gold reserves were mostly held abroad to stabilize exchange.

A. Both A and R are true.
B. A is true, but R is false.
C. A is false, but R is true.
D. A is false, but R is the correct explanation.

44. Which among the following best explains the term “Home Charges”?
A. Internal village taxation
B. Payments made by India to Britain for administration and military expenses
C. Land tax on zamindars
D. Currency reserve obligations

45. Match List I with List II regarding monetary features:

A. A-I, B-II, C-IV, D-III
B. A-II, B-I, C-III, D-IV
C. A-IV, B-III, C-I, D-II
D. A-II, B-IV, C-I, D-III

46. The Controller of Currency was mainly responsible for:
A. Regulating village moneylenders
B. Agricultural credit creation
C. Managing paper currency reserves and note issuance
D. Collecting land revenue

47. Which among the following is NOT associated with the RBI at its establishment?
A. Nationalized public ownership from inception
B. Currency issuance
C. Government banker
D. Regulation of credit

48. Assertion (A): British monetary policy gave significant attention to Indian industrial credit.
Reason (R): Colonial policy encouraged indigenous capital formation.

A. Both A and R are true.
B. A is true, but R is false.
C. A is false, but R is true.
D. Both A and R are false.

49. By 1945, India accumulated Sterling Balances amounting to approximately:
A. ₹700 crore
B. ₹1,000 crore
C. ₹1,700 crore
D. ₹2,500 crore

50. Which among the following best reflects the colonial objective of exchange rate stability?
A. Promoting Indian exports independently
B. Ensuring employment generation
C. Facilitating trade with Britain and remittance of Home Charges
D. Strengthening cooperative banking

51. Match List I with List II regarding historical developments:

A. A-I, B-II, C-IV, D-III
B. A-II, B-IV, C-I, D-III
C. A-II, B-III, C-IV, D-I
D. A-IV, B-I, C-II, D-III

52. The Reserve Bank of India became nationalized on:
A. 15 August 1947
B. 1 January 1949
C. 26 January 1950
D. 31 March 1935

53. Assertion (A): British India’s monetary policy was developmental in orientation.
Reason (R): It aimed at social welfare and equitable growth.

A. Both A and R are true.
B. A is true, but R is false.
C. A is false, but R is true.
D. Both A and R are false.

54. The first official Government of India notes were issued under the authority of:
A. Governor-General alone
B. RBI Governor
C. Presidency Banks
D. Secretary of State for India in Council

55. Match List I with List II regarding standards and systems:

A. A-II, B-I, C-III, D-IV
B. A-I, B-II, C-IV, D-III
C. A-IV, B-I, C-II, D-III
D. A-II, B-IV, C-I, D-III

56. Which among the following best explains colonial conservatism in credit policy?
A. Strong agricultural banking network
B. Minimal institutional support for agriculture and industry
C. RBI-led industrial finance
D. Massive rural cooperatives

57. The Paper Currency Act of 1861 ended note issuance by:
A. RBI
B. Provincial governments
C. Presidency Banks of Bombay, Calcutta, and Madras
D. Indian princely states

58. Assertion (A): World War II sharply expanded India’s money supply.
Reason (R): Britain financed war expenditure partly through currency expansion and deficit financing in India.

A. Both A and R are true, but R is not the explanation.
B. Both A and R are true, and R is the correct explanation.
C. A is true, but R is false.
D. A is false, but R is true.

59. Which among the following best describes the “Drain of Wealth” theory in monetary terms?
A. Rise in agricultural productivity
B. Expansion of cooperative credit
C. Net transfer of Indian resources to Britain through monetary mechanisms
D. Increased industrial borrowing

60. Which of the following sectors remained largely dependent on moneylenders due to lack of institutional credit?
A. Railway sector
B. British commercial houses
C. Urban industries
D. Rural agricultural economy

61. Match List I with List II regarding monetary events and consequences:

A. A-I, B-II, C-III, D-IV
B. A-II, B-IV, C-I, D-III
C. A-IV, B-III, C-II, D-I
D. A-II, B-III, C-I, D-IV

62. Which among the following best explains why India initially preferred the silver standard over the gold standard?
A. Britain prohibited gold circulation in India
B. Silver was dominant in domestic and Asian trade systems
C. Gold reserves were unavailable globally
D. RBI preferred silver currency

63. Assertion (A): The colonial state emphasized price stability over exchange stability.
Reason (R): British monetary policy prioritized Indian welfare objectives.

A. Both A and R are true.
B. A is true, but R is false.
C. A is false, but R is true.
D. Both A and R are false.

64. Which among the following committees is associated with monetary reform in British India in 1893?
A. Chamberlain Commission
B. Fowler Committee
C. Herschell Committee
D. Hilton Young Commission

65. Match List I with List II regarding wartime monetary changes:

A. A-II, B-III, C-I, D-IV
B. A-I, B-II, C-IV, D-III
C. A-IV, B-I, C-II, D-III
D. A-III, B-II, C-I, D-IV

66. Which among the following was NOT a function of RBI during colonial rule?
A. Banker to the Government
B. Custodian of foreign exchange
C. Lender of last resort
D. Independent developmental planning for India

67. The Indian monetary system before the Coinage Act of 1835 was characterized by:
A. Gold-based uniformity
B. Regional diversity in coinage systems
C. Exclusive paper currency circulation
D. RBI-regulated credit markets

68. Assertion (A): The Currency Reserve Fund backed paper currency in colonial India.
Reason (R): It included gold, silver, and government securities.

A. Both A and R are true, but R is not the explanation.
B. Both A and R are true, and R is the correct explanation.
C. A is true, but R is false.
D. A is false, but R is true.

69. Which among the following best explains token currency?
A. Currency fully backed by gold domestically
B. Currency issued by princely states
C. Currency whose face value exceeds intrinsic metal value
D. Currency usable only in urban areas

70. The global fall in silver prices after 1873 was mainly caused by:
A. Decline in mining activity
B. RBI monetary restrictions
C. Indian overproduction of silver
D. Increased silver production and demonetization in Western countries

71. Match List I with List II regarding colonial monetary priorities:

A. A-I, B-II, C-IV, D-III
B. A-II, B-IV, C-III, D-I
C. A-IV, B-I, C-II, D-III
D. A-II, B-I, C-IV, D-III

72. Which among the following best describes the role of the British Treasury in relation to Sterling Balances?
A. It distributed gold reserves to Indian peasants
B. It abolished wartime borrowing
C. It exercised control over India’s wartime accumulated balances
D. It converted all balances into rupee notes immediately

73. Assertion (A): The Chamberlain Commission fully implemented the gold bullion standard in India.
Reason (R): Global instability prevented complete implementation.

A. Both A and R are true.
B. A is true, but R is false.
C. A is false, but R is true.
D. A is false, but R is not the correct explanation of A.

74. Which of the following was a major effect of wartime monetary expansion during WWII?
A. Stable commodity prices
B. Inflation, scarcity, and black markets
C. Fall in money supply
D. Expansion of agricultural credit

75. Match List I with List II regarding institutions and responsibilities:

A. A-I, B-II, C-IV, D-III
B. A-II, B-I, C-IV, D-III
C. A-II, B-I, C-III, D-IV
D. A-IV, B-I, C-II, D-III

76. The revaluation of the rupee in 1920 was primarily intended to:
A. Promote rural lending
B. Reduce British imports into India
C. Maintain confidence in Indian currency and check inflation
D. Replace sterling with gold coins

77. Which among the following best explains the colonial approach toward rural credit?
A. Institutional neglect resulting in dependence on moneylenders
B. Large-scale state banking intervention
C. Heavy subsidies for peasants
D. Credit expansion through RBI before 1935

78. Assertion (A): British India lacked a central bank for most of the colonial period.
Reason (R): Monetary administration was handled by government departments before RBI.

A. Both A and R are true, but R is not the explanation.
B. Both A and R are true, and R is the correct explanation.
C. A is true, but R is false.
D. A is false, but R is true.

79. The headquarters of RBI was later shifted from Calcutta to:
A. Madras
B. Delhi
C. Bombay (Mumbai)
D. Nagpur

80. Which among the following was the major criticism of colonial monetary policy?
A. Excessive industrial investment
B. Overemphasis on welfare economics
C. Alignment with British imperial priorities rather than Indian development
D. Weak trade linkages with Britain

81. Match List I with List II regarding dates and events:

A. A-II, B-III, C-IV, D-I
B. A-I, B-II, C-IV, D-III
C. A-IV, B-I, C-II, D-III
D. A-II, B-IV, C-I, D-III

82. Which among the following best explains why silver coins were melted during World War I?
A. Their circulation was banned
B. Silver value exceeded the face value of rupee coins
C. RBI ordered demonetization
D. Britain withdrew silver reserves

83. Assertion (A): RBI remained under British influence even after 1935.
Reason (R): Monetary policy largely served imperial interests until independence.

A. Both A and R are true, and R is the correct explanation of A.
B. Both A and R are true, but R is not the correct explanation.
C. A is true, but R is false.
D. A is false, but R is true.

84. Which among the following best defines the gold exchange standard?
A. Domestic circulation of gold coins only
B. Complete abandonment of silver currency
C. Currency backed only by agricultural produce
D. Currency linked indirectly to gold through another currency like sterling

85. Match List I with List II regarding colonial monetary characteristics:

A. A-I, B-II, C-IV, D-III
B. A-II, B-IV, C-III, D-I
C. A-IV, B-I, C-II, D-III
D. A-II, B-I, C-IV, D-III

86. Which among the following became the official monetary authority after 1935?
A. Presidency Banks
B. Finance Department alone
C. Reserve Bank of India
D. British Treasury

87. Assertion (A): Colonial monetary policy encouraged large-scale agricultural credit expansion.
Reason (R): British administration aimed at rural welfare and farmer prosperity.

A. Both A and R are true.
B. A is true, but R is false.
C. A is false, but R is true.
D. Both A and R are false.

88. Which among the following is correctly matched?
A. Paper Currency Act — 1835
B. RBI Act — 1899
C. Herschell Committee — 1920
D. Chamberlain Commission — Gold Bullion Standard recommendation

89. The major emphasis of British India’s monetary regime was:
A. Employment generation
B. Exchange rate stability and imperial economic interests
C. Universal banking expansion
D. Welfare-driven fiscal planning

90. Match List I with List II regarding final outcomes of colonial monetary policy:

A. A-I, B-II, C-IV, D-III
B. A-II, B-I, C-IV, D-III
C. A-IV, B-I, C-II, D-III
D. A-II, B-I, C-III, D-IV