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Memory is inside the computer and is used when the computer is working on something.  When your computer starts Windows and all the programs that start up are read off the hard drive, where they are stored permanently, and put into memory to run.  No information can be stored in your computer's memory permanently.  When you turn the computer off, the memory is erased completely.  This is why the computer takes a while to "boot up".  Memory is much quicker than the hard drive, so it takes a while to load all of that information into the computer's memory, but once it's done things move considerably faster.

Adding memory will not help you if your computer is running out of space as nothing is permanently stored in memory.  Adding memory may help programs run faster, but only if the program requires more memory than you have.  If the program already has enough memory to run efficiently then adding memory will not change anything.