Step 1: Analyze the recurrence.
We are given the recurrence relation: \[ x_{n+1} = 2 + \frac{1}{2x_n}. \] We observe that this recurrence ensures that \( x_n \) stays bounded and converges.
Step 2: Check if the sequence is Cauchy.
A sequence is Cauchy if the terms get arbitrarily close as \( n \) increases. In this case, since the recurrence leads to a bounded and convergent sequence, \( (x_n) \) is a Cauchy sequence.
Final Answer: \[ \boxed{x_{n+1} \geq \frac{4}{x_n} \text{ for all } n \in \mathbb{N}, \text{ and } (x_n) \text{ is a Cauchy sequence.}} \]