What Did Schumpeter Mean by the Term 'Creative Destruction

question 5

Multiple Choice

What did Schumpeter mean by the term 'creative destruction'?

• A) That in the competitive process new business ideas would replace older ones, and that this process of innovation would inevitably mean that change would occur with old companies, products, or processes being replaced by new ones
• B) That new ideas may sometimes have harmful effects
• C) That capitalism as an economic system would destroy itself through competition
• D) That because businesses were under pressure to invest in new technology, they would constantly be facing falling profits and would inevitably fail

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Definitions:

Invisible Hand

A metaphor used by Adam Smith to describe unintended social benefits resulting from individual actions.

Economists

Researchers who explore the processes of making, moving, and consuming products and services in the economy.

Economic Activity

Activities related to the manufacturing, disseminating, and utilizing products and services in an economic system.

Fluctuations

Fluctuations refer to variations or changes in a condition, value, or level of economic variables over time.