Concept:
Angle between hour hand and minute hand:
\[
\theta=\left|30H-\frac{11M}{2}\right|
\]
where:
\[
H=\text{hour},\; M=\text{minutes}
\]
Step 1: Substitute the given time.
Given:
\[
H=7,\;M=16
\]
\[
\theta=\left|30(7)-\frac{11(16)}{2}\right|
\]
\[
=\left|210-\frac{176}{2}\right|
\]
\[
=\left|210-88\right|
\]
\[
=122^\circ
\]
Step 2: Check smaller angle.
Since:
\[
122^\circ < 180^\circ
\]
It is already the smaller angle.
Thus, the required angle is:
\[
\boxed{122^\circ}
\]