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Memory = system memory = Ram.
Quality of memory is based on what speed it can run stable at, not the quantity of ram. When running pcsx2 a system of 2gb is plenty even for the memory vortex known as Vista.
You have a 32bit OS so it is only capable of addressing(using) about ~3gb of the 4gb your actual memory. If you were to put in 8gb of memory your system would still say ~3gb and thats all you use.
Some of the missing 1gb or memory also gets allocated to your videocard.
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