When a conductor is exposed to a magnetic field an electrical current is produced. By constantly reversing its polarity, the electrical current fluctuates back and forth in the opposite direction. This fast and constant reversal of the electrical current direction is called alternating current (AC).
Permanent magnets are objects that produce their own persistent magnetic fields. All permanent magnets have both a north and a south pole. Like poles repel and opposite poles attract. The magnetism in a permanent magnet arises from properties of the atoms, in particular the electrons, that compose it. Each atom acts like a little individual magnet. If these magnets line up, they combine to create a macroscopic magnetic effect. For more details about what happens both microscopically and macroscopically, see the article ferromagnetism.