​When you make a paper-clip chain, you are inducing magnetism in the steel paper clips. To induce means to make something happen. You have turned a paper clip into a temporary magnet.

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A Temporary Magnet

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Magnets can attract iron from a distance and through materials, because magnets are surrounded by an invisible magnetic field that extends out from their poles. This force field is a region where the magnetic forces can be observed or detected. The magnet exerts a force that acts right through wood, paper, plastic, and air.

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