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“A step up transformer increases the AC voltage.” The statement is:
(A). True
(B). False
(C). Ambiguous
(D). Data insufficient

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Answer
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Hint: A transformer uses the principle of electromagnetic induction which states that a voltage can be generated in a coil kept in a changing magnetic field. A step up transformer uses this principle to output an AC voltage that is increased than the input AC voltage.

Formula used:
$\dfrac{\text{Voltage in secondary coil of transformer }\left( {{V}_{2}} \right)}{\text{Voltage in primary coil of transformer }\left( {{V}_{1}} \right)}=\dfrac{\text{Number of turns in Secondary coil of transformer }\left( {{N}_{2}} \right)}{\text{Number of turns in primary coil of transformer }\left( {{N}_{1}} \right)}$ $\therefore \dfrac{{{V}_{2}}}{{{V}_{1}}}=\dfrac{{{N}_{2}}}{{{N}_{1}}}$

Complete step by step answer:
A transformer is an electrical machine that uses the principle of electromagnetic induction which states that a voltage can be generated in a coil kept in a changing magnetic field.
A transformer has two coils, the primary (or input) coil and the secondary (or output) coil. Input voltage is applied at the primary coil and an increased or decreased output voltage (depending upon the ratio of turns in the primary and secondary coils) is obtained in the secondary or output coil.
Therefore,
$\dfrac{\text{Voltage in secondary coil of transformer }\left( {{V}_{2}} \right)}{\text{Voltage in primary coil of transformer }\left( {{V}_{1}} \right)}=\dfrac{\text{Number of turns in Secondary coil of transformer }\left( {{N}_{2}} \right)}{\text{Number of turns in primary coil of transformer }\left( {{N}_{1}} \right)}$ $\therefore \dfrac{{{V}_{2}}}{{{V}_{1}}}=\dfrac{{{N}_{2}}}{{{N}_{1}}}$
A step up transformer has a greater number of turns in its secondary coil than its primary coil. Thus, the output voltage produced in the secondary coil is greater than the input voltage in the primary coil.
Therefore, using the formulas stated above, the step up transformer increases the AC voltage.
Hence, the statement is true.
So, the correct option is A) True.

Note: The opposite of a step up transformer is a step down transformer which has more turns on the primary side and thus reduces AC voltage. A combination of step up and step down voltages are used for efficient electricity transmission.
In the power production plant a step up transformer increases AC voltage, so that it can be transmitted without great losses. A high voltage leads to lower current ($\text{Power=Voltage}\times \text{Current}$ remains constant). A lower current leads to lower losses due to resistive dissipation$\left( {{I}^{2}}R \right)$. Near our homes, there are local plants which step down the voltage using a step down transformer and send it to our homes.
Step down transformers decrease voltage but increase current by the same factor to keep the power constant, ($\text{Power=Voltage}\times \text{Current}$) whereas step up transformers do exactly the opposite and step up voltage but step down current.