D

Step 1: Understanding Eddy Currents: Eddy currents are loops of electrical current that are induced within conductors by a changing magnetic field in the conductor, according to Faraday's law of induction. These currents flow in the plane perpendicular to the magnetic field and can cause significant energy losses in the form of heat.

Step 2: Laminating the Dynamo Core: To reduce the eddy currents and the resultant energy loss, the core of the dynamo is laminated. This means it is made up of thin insulated layers rather than a solid piece. The insulation between the layers increases the resistance to the flow of eddy currents, thereby minimizing their magnitude.

Step 3: Conclusion: The primary reason for using laminated cores in a dynamo is to decrease the energy loss due to eddy currents. Therefore, the correct answer is: Loss of energy in core due to eddy currents decreases (Option D).