What is the effect of internal resistance of the source to its output voltage?

(a) It reduces the amount of current.

(b) Any current that does pass the resistor will lose some power; this lost power is converted to heat in the resistance.

Internal resistance acts to reduce the terminal voltage of the voltage source when it supplies a load. This is due to the internal voltage drop caused when the load current passes through the internal resistance of that source. The greater the load, the lower the resulting teminal voltage.

By definition, a voltage source's electromotive force is equal to the sum of the voltage drops, including the internal voltage drop, of the circuit supplied.