the observed frequency will reduce but the wavelength will increase
Explanation:
As we know
fo = fs (v/(v-vs))
fo = observed frequency
vs = velocity of source
As per this equation,
When an observer moves away from the stationary source, the observed frequency reduces. Since the observer in the balloon is moving away from the source which itself is moving in opposite direction, the observed frequency will reduce.
Since wavelength = V/fs . The source frequency is unchanged but the velocity is increasing as it is moving in downward direction. Hence, the wavelength will increase
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