Final answer:
A differential voltmeter is a precision instrument that measures unknown voltage by comparing it with an internal reference voltage. This comparison allows for highly accurate voltage readings and reduces potential measurement errors.
Step-by-step explanation:
The type of voltmeter that is a precision instrument and compares an unknown voltage with an internal reference voltage is known as a differential voltmeter. This device is employed to provide accurate voltage measurements. A differential voltmeter is connected to the circuit in such a way that it compares the unknown voltage against a precise reference voltage within the meter itself, leading to a high degree of measurement precision. Unlike standard voltmeters, which may introduce an element of inaccuracy due to their loading effect on a circuit, null measurement devices like the differential voltmeter reduce this potential error. Digital multimeters, which may include functions similar to differential voltmeters, provide reliable and versatile measurement capabilities and can measure voltage as well as current and resistance.