Final answer:
The question deals with methods for calculating Quebec Pension Plan contributions, which can be done by a percentage of gross earnings or a flat rate per hour. An example of percentage change shows a $2 raise on a $10/hour job results in a 20% increase, illustrating how small changes can impact overall income like compound growth rates.
Step-by-step explanation:
The subject of this question surrounds the calculations involved for the Quebec Pension Plan (QPP) contributions on regular earnings. When calculating QPP contributions, there are approved methods which are:
- Percentage of gross earnings: This involves calculating contributions as a portion of the employee's total earnings before any deductions.
- Fixed monthly amount: This option isn't standard for typical QPP contributions as it doesn't fluctuate with changes in earnings.
- Flat rate per hour: Similar to the first method, contributions are calculated based on the number of hours worked, but at a set rate per hour, not as a percentage.
To clarify with an example, if an employee receives a wage increase, the percentage change in their pay can be determined by the formula: Change in quantity divided by Quantity. For instance, a $2 raise from a $10 per hour job results in a 20% increase. This percentage change is significant because, like compound interest and compound growth rates, small percentage changes can substantially affect income over time.