Final answer:
In a generator, as a loop of wire turns between two permanent magnets, a current is induced in the loop due to a changing magnetic field, thus converting mechanical energy into electrical energy.
Step-by-step explanation:
When a loop of wire turns between two permanent magnets in a generator, a current flows through the loop of wire. This process occurs due to the principle of electromagnetic induction, which states that a voltage is induced in a loop when it is exposed to a changing magnetic field. The movement of the loop between the fixed magnets causes the magnetic field through the loop to change, which then induces an electrical current in the wire. This is the fundamental operating principle of electric generators, which convert mechanical energy into electrical energy.