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RAM stands for Random Access Memory. It is the microchips inside the computer that stores data in current use so it can be retrieved by the CPU faster than other means. The data in the RAM is only stored whilst the computer is switched on, when you turn it off the data is flushed out and when you turn it on again fresh data is added into it. The greater the amount of ram, the less times the CPU has to reach to the Hard Disk to retrieve data. Most computers have additional slots inside to accomodate extra 'sticks' of RAM to increase performance.
There are varying types of RAM that operate at varying speeds, some of these include:
SODIMM -Laptops
DIMM - Older machines, single core cpu's.
DDR - Found in Pentium 4's / Athlons
DDR2 - Found in quad cores, laptops, dual cores.
DDR3 - Found in i7 machines.
These are the most common types, most likely to be found in a home computer. The more modern the ram, the faster the speed it can operate.

Sticks of Ram, irrespective of capacity they appear to look the same.