Electrical Machines
Compensating windings are used in DC generators

None of these
  to provide path for the circulation of cooling air.
  mainly to reduce the eddy currents by providing local short circuit.
  to neutralize the cross magnetizing effect of the armature reaction.

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Electrical Machines
In an alternator, voltage drops occurs in

  armature resistance and leakage reactance.
  armature resistance, leakage reactance, armature reaction and earth connection.
  armature resistance only.
  armature resistance, leakage reactance and armature reaction.

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