Concept of Money during Colonialism of India MCQs and Answers

1. What was the primary purpose of money during colonialism in India?

a. To trade

b. To purchase goods and services

c. To store value

d. All of the above

Answer: d

Explanation: During colonialism in India, money was used primarily as a means of exchange. That is, it was used to buy and sell goods and services. However, money also served other purposes, such as providing a store of value and a unit of account.


2. Which of the following was not a type of currency used in colonial India?

a. Rupees

b. Pice

c. Pound

d. Anna

Answer: c

Explanation: There are a few different types of currency that were used in colonial India. The first is the rupee, which was the primary currency during the period. The second is the pice, which was a smaller unit of currency. The third is the anna, which was even smaller than the pice. The fourth is the ratti, which was the smallest unit of currency.


3. How did the British government ensure that there was enough money in circulation in India?

a. By established the Bank of Calcutta

b. By introducing the system of seigniorage

c. By establish the Mint at Fort William

d. All of the above

Answer: d

Explanation: In order to ensure that there was enough money in circulation in India, the British government took a number of measures. Firstly, they established the Bank of Calcutta in 1806, which served as a central bank for the country. Secondly, they introduced the system of seigniorage, which allowed them to issue more currency. Finally, they established the Mint at Fort William, which produced coins for circulation.


4. What was the consequence of the British government’s policy of issuing more paper money in India?

a. It led to inflation

b. It caused a shortage of coins

c. It made it difficult to trade with other countries

d. All of the above

Answer: a

Explanation: The British government’s policy of issuing more paper money in India led to inflation and economic hardship for the people of India. The value of the rupee decreased, making it difficult for people to buy basic necessities. The government’s policy was intended to help the British economy, but it had the opposite effect on India.


5. What was the primary use of silver coins in India during colonialism?

a. To purchase goods and services

b. To store value

c. To pay taxes

d. All of the above

Answer: a

Explanation: In India, prior to colonialism, silver coins were primarily used as a means of exchange. This was because silver was relatively abundant in India, and thus, it served as an effective medium of exchange. However, during colonialism, the primary use of silver coins shifted to being a store of value. This was because the British colonizers imposed a silver standard on the Indian economy, which meant that all Indian currency was pegged to the value of silver. As a result, silver coins became a more valuable commodity, and were increasingly used as a store of value rather than a means of exchange.


6) How did the British view money and its use in India?

a. They respected Indian money and used it as currency.

b. They saw money as a tool to be used for their benefit.

c. They saw it as valueless and worked to replace it with their own currency.

d. None of these

Answer: b

Explanation: The British view money and its use in India in a very different light than the Indians. For the British, money is a tool to be used for their benefit, while for the Indians, money is a means of exchange that should be used for the benefit of all. The British view money as something that should be used to their advantage, while the Indians view it as something that should be used to the benefit of all.


7) What were the consequences of the British attitude towards money in India?

a. economic growth and stability

b. a decline in the use of Indian money and an increase in the use of British currency

c. inflation and economic instability

d. none of the above

Answer: d

Explanation: The British attitude towards money in India had far-reaching consequences. It effectively made India a colony of Britain, with all the attendant economic and political disadvantages. India was forced to export raw materials to Britain and import manufactured goods from Britain, leading to a massive trade deficit. This, in turn, led to a depletion of India’s foreign exchange reserves and a growing dependence on Britain. The British also exploited India’s natural resources, leading to environmental degradation and a decline in the standard of living of the people of India.


8) What was the result of the British policy of using Indian money?

a. It caused economic growth and stability.

b. It led to a decline in the use of Indian money and an increase in the use of British currency.

c. It led to inflation and economic instability.

d. It had no significant effect.

Answer: c

Explanation: The British policy of using Indian money was a disaster for the Indian economy. The policy led to a huge increase in the price of silver, which caused inflation and economic chaos. The policy also caused a decline in the value of the rupee, which made India’s exports uncompetitive.


9. What were some of the challenges in using money during colonialism?

a. Lack of access to money

b. Inflation

c. Limited economic opportunities

d. All of these

Answer:

Explanation: During colonialism, money was often one of the biggest challenges faced by communities. (i) Lack of access to money: This was a major problem in many communities, especially in rural areas. People often had to travel far to find a place where they could exchange money for goods or services. (ii) Inflation: This was a common problem in colonies where the local currency was not well-regulated. This often led to prices for goods and services rising, which made it difficult for people to afford basic necessities. (iii) Limited economic opportunities: This was a major problem in many colonies, where the majority of the population was not allowed to participate in the formal economy. This often left people struggling to make ends meet.


10. How did the British use money to control India?

a. by controlling the minting of coins

b. by controlling the import and export of gold and silver

c. by imposing high taxes on Indian industry

d. all of these

Answer: d

Explanation: The British used money to control India in a number of ways. One was by controlling the minting of coins. The British also had a monopoly on the import and export of gold and silver, which they used to finance their own trade deficit. Finally, the British imposed high taxes on Indian industry, which made it difficult for Indian businesses to compete.

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