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In this video tutorial, we learn how to set up business letters in Microsoft Word. First, the top margin is adjusted from 1 inch to 2 inches. To do this, we navigate to the Page Layout tab, select Margins, and then choose Custom Margins to input the new top margin. After pressing OK, the cursor moves down, confirming the adjustment. The tutorial continues by explaining how to change the font style, size, and spacing options before making any further modifications to the document.