The housing bubble experienced in 2006 in the U.S. was exhibited by the extraordinary rise in the ratio of prices of houses to rents on houses

Which of the following is NOT a basic assumption of the "Lucas" model?

A) slow adjustment of wages and prices B) rational expectations C) imperfect information D) market-clearing

Suppose that during a given month 200,000 persons who had been self-employed leave their business and get jobs working for other businesses. This will cause

A) the unemployment rate to rise. B) the unemployment rate to fall. C) payroll employment to rise. D) payroll employment to fall. E) no change in either the unemployment rate or payroll employment.