The figure shown explains the difference between AM & FM. A high-frequency carrier is used in both the modulation schemes.
- In AM, the amplitude of the carrier signal is modulated according to the varying amplitudes of the input signal (Black color), maintaining constant frequency for the resultant AM signal (Red color)
- In FM, the frequency of the carrier signal is modulated according to the varying amplitudes of the input signal (Black color), maintaining constant amplitude for the resultant FM signal (Blue color)
Firstly, understand that the wave property translation is different from modulation.
- Amplitude modulation -> Adding information in the form of amplitude changes to the constant frequency carrier.
- Amplitude translation -> Amplification/attenuation of the signal, wherein all the amplitude levels are scaled by a factor.
- Frequency modulation -> Adding information to the carrier signal by modulating the frequency of the carrier of constant amplitude.
- Frequency translation -> Up/down conversion of the signal by mixing with another signal of constant frequency.
You are right that in AM transmission, both the amplitude & frequency are changed from the original information signal. BUT, the amplitude is modulated & the frequency is translated.
If you look at the AM receiver block shown above, the received signal is downconverted, amplified and then demodulated to decode the information sitting on the amplitudes of the signal.