Final answer:
The effect of a wire loop turning between two permanent magnets in a generator is the conversion of mechanical energy into electrical energy, as motion induces an electromagnetic force that creates a flow of current.
Step-by-step explanation:
When a loop of wire turns between two permanent magnets in a generator, the effect of this motion is mechanical energy transforming into electrical energy. This process occurs because as the wire loop rotates due to mechanical force, charges within the loop are moved through the magnetic field, creating a flow of current within the loop. Essentially, the motion induces an electromagnetic force according to Faraday's Law of Induction, leading to the production of electric current. Therefore, the correct answer to the question is B. Mechanical energy transforms into electrical energy.