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Absolutely! A pc power supply unit (PSU) will deliver the power required up-to it's maximum capacity. Taking your example, if a system is only using 120 watts then any PSU will deliver those 120 watts. If the system should then require more wattage while under load then the PSU will deliver that too.
The big myth about PSU's is that a 400watt for example will always deliver 400watts. This is not true. The PSU will deliver whats required and not a watt more.
I always advise people to go slightly overkill on their PSU for 2 reasons.
1 - It means you have plenty of "headroom" for upgrading to more power hungry components without having to worry about the PSU being able to handle it.
2 - If the wattage being drawn is way below the maximum of the PSU it will generate far less heat and will keep going for much much longer than a PSU that is being forced to constantly produce close to its maximum.
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