Amplitude modulation, commonly abbreviated as AM, is a very common way of modulating a signal for transmission. It is only slightly more complicated than double-sideband modulation, but is easier to implement in hardware. The major disadvantage of AM is that is inefficient. Since AM demodulation is easy and cheap to implement, it becomes possible to mass produce inexpensive receivers, such as the common radio. So although radio stations have to put a lot of power into transmitting a signal, a large audience is ready to receive it, making it cost effective.

AM works by adding a dc bias to the message signal, and then multiplying that by a carrier signal. The purpose of the dc bias is to raise the minimum value of the message signal above zero, any part of the message signal that is negative will be distorted when the signal is demodulated. The message signal becomes an envelope for the carrier signal, in that when the message and the carrier signals are multiplied, the message signal determines the amplitude of the carrier.

Demodulation is achieved by removing the positive or negative side of the transmitted signal, and then a low pass filter is applied to remove the carrier. Finally, the signal is shifted by a dc bias, and the message signal is recovered.

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