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When an ac current passes through the conductor it sets up a magnetic field around the conductor. This magnetic field is proportional to the current. A Hall Effect Transducer is placed in a slotted ferromagnetic tube which acts as a magnetic concentrator. The voltage produced at the output terminals is proportional to the magnetic field strength and hence is proportional to the current flowing in the conductor. In this way, the current is measured using the Hall effect transducer.
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