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a step-up transformer increases the potential difference
a step-down transformer reduces the potential difference
Structure of a transformer
A basic transformer is made from two coils of wire; a primary coil from the ac input and a secondary coil leading to the ac output. The coils are not electrically connected. Instead, they are wound around an iron core. This is easily magnetised and can carry magnetic fields from the primary coil to the secondary coil.
When a transformer is working:
a primary potential difference drives an alternating current through the primary coil
the primary coil current produces a magnetic field, which changes as the current changes
the iron core increases the strength of the magnetic field
the changing magnetic field induces a changing potential difference (voltage) in the secondary coil
the induced potential difference produces an alternating current in the external circuit
Transformers can only work with alternating current.