You can't prove that generalization is likely correct. <em />It is told that generalization is never correct and some has told that generalization is sometimes correct, so I guess that would depend on your thoughts, opinions.
hope this helped!!
~Melany~ ;)
Sales increased 50% last year, from $5,000 to $10,000. When sales dropped from $10,000 to $5,000 this year, sales decreased 50%
The <u> nominal return </u>on an investment doesn't consider the effect of inflation on purchasing power. If the inflation rate is positive, then the real return will be <u> less than </u> the nominal return on an investment.
Positive inflation eats away at the value of the dollar. For instance, an item worth $100 one year could be worth $105 the next year if inflation was 5%. Therefore, you've lost 5 dollars worth of purchasing power (since you need 5 extra dollars to get the same item).
The formula is
real return = nominal return - inflation
If inflation is positive, then the real return is smaller than the nominal return.
If inflation is negative (ie we have deflation), then the real return is larger than the nominal return.
