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The power supply (or PSU) is exactly as it sounds, the power for the computer. The main power (from the wall outlet) goes directly into the power supply, where the voltage is lowered and regulated, then it is distributed to different parts of the motherboard, such as the motherboard, harddrive, or CD drive.

PSUs are rated in watts, the more watts the psu has, the more demanding hardware it can operate. A computer with a powersupply can often lose performance, or even overload the power supply and cause it to burn out (blow up).