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The primary role of an automatic voltage regulator (AVR) is to regulate the reactive power and voltage magnitude. The system modeled consists of the amplifier, exciter, sensor and stabilizer or proportional-integral-derivative (PID) controller. The state-space technique is used to model the system. Their characteristics and behavior are also briefly discussed. Results of the simulation studies on the AVR system using Matlab are presented. By examining the parameters of the stabilizer and controller, the generator terminal voltage variations are predicted.