Q.What is the purpose of an AFC loop? Why is FM prefered to AM?.

An FM transmitter can use the direct method (a reactance modulator acts on the carrier oscillator to change its frequency directly) or the indirect method (phase modulation of a crystal-controlled carrier). In a directly-modulated transmitter the audio passes through a pre-emphasis network and an AF power amplifier, then drives the reactance modulator across the carrier oscillator's tank to produce FM. The oscillator output passes through a buffer amplifier (isolating the oscillator from later stages so they cannot pull its frequency), an amplitude limiter (keeping the amplitude constant), and frequency multipliers (which raise both the carrier frequency and the deviation, and hence the modulation index, by the same factor), before a class C power amplifier drives the antenna.

Because the direct method does not by itself hold a stable carrier frequency, an automatic frequency control (AFC) loop is added: part of the signal is mixed with a crystal reference, the difference is applied to a discriminator that outputs a DC voltage whose polarity depends on the direction of drift, and that voltage adjusts the reactance modulator to pull the carrier back on frequency. …