Question: 1. (5 points) Consider the recursion u; = 3u;_; - b. (a) Find the value of b such that the equilibrium solution of this recursion

1. (5 points) Consider the recursion u; = 3u;_; - b.

1. (5 points) Consider the recursion u; = 3u;_; - b. (a) Find the value of b such that the equilibrium solution of this recursion is u = 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 ws = 3u;-1 = b to a geometric recursion of the form v = Avy_y

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