Convertible paper money and Inconvertible paper money.
|Points||Convertible Paper Money||Inconvertible Paper Money|
|1. Meaning||It is that money which can be converted into standard money on demand.||It is also known a fiat money, this money is sanctioned on the command of Government.|
|2. Backed by Reserves||This money is normally backed by gold or silver reserves. Therefore, it can be converted into gold or silver.||This money is not backed by gold or silver reserves. Therefore, it cannot be converted into gold or silver.|
|3. Current Usage||Nowadays, convertible paper money is not in use.||Nowadays, inconvertible paper money is in use in almost all countries.|
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Solution Convertible Paper Money and Inconvertible Paper Money. Concept: Type of Money.