Ken Kundert
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The model of the output of a common source amplifier is a controlled current source in parallel with a resistor, ro. The channel length modulation determines the size of the resistor. The more channel length modulation, the smaller the resistor.
If the load resistor Rd is small, then it overwhelms ro. If the load resistor is large, then Rd does not overwhelm ro, meaning that ro affects the overall gain, distortion, etc.
-Ken
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