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( 5 points ) Consider the recursion ut = 3 ut 1 b . ( a ) Find the value of b such that the

(5 points) Consider the recursion ut =3ut1 b.
(a) Find the value of b such that the equilibrium solution of this recursion is =500.
(b) Using the value of b you found in question (a), make a change of variables and show how this change transforms the affine geometric recursion ut =3ut1 b to a geometric recursion of the form vt =\lambda vt1.

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