Introduction:
In a loaded DC generator, the commutation process is crucial for maintaining a constant and stable output voltage. Commutation refers to the process of reversing the current in the armature coil as it passes from one commutator segment to another. It is essential for converting alternating current (AC) induced in the armature coils to direct current (DC) output.

Explanation:
When the brushes of the DC generator are given a shift from the interpolar axis in the direction of rotation, the commutation process is improved. This means that the brushes are slightly displaced ahead of the neutral plane or plane of commutation. Let's understand why this improves commutation:

1. Neutral Plane and Commutation:
- The neutral plane is the plane perpendicular to the magnetic field where no voltage is induced in the armature coils.
- Commutation occurs when the brushes short-circuit the coils undergoing commutation, allowing the current to flow in the desired direction.
- Ideally, the brushes should be placed exactly on the neutral plane to achieve perfect commutation.

2. Effect of Brush Shift:
- When the brushes are given a shift from the neutral plane in the direction of rotation, the coils undergoing commutation are short-circuited slightly earlier.
- This means that the current in the coils is reversed before they completely leave the magnetic field, resulting in improved commutation.

3. Advantages of Improved Commutation:
a) Reduction in Sparking:
- Sparking occurs when the current is not reversed smoothly during commutation.
- By shifting the brushes, the reversal of current happens earlier, reducing the chances of sparking.

b) Reduced Armature Reaction:
- Armature reaction is the effect of armature current on the main magnetic field.
- Improved commutation leads to a reduction in armature reaction, minimizing the distortion of the main field.
- This results in a more stable output voltage.

4. Effect on Terminal Voltage (Vt):
- When the commutation process is improved, the terminal voltage (Vt) of the generator does not fall significantly.
- This is because improved commutation ensures a smoother reversal of current, reducing the voltage drop and fluctuations.

Therefore, the correct option is 'A' - the commutation will improve with a fall in terminal voltage (Vt).