According to Joseph Schumpeter:
A) entrepreneurs prefer self-financing to borrowing from established financial markets.
B) the role of the financial sector of the economy is greatly exaggerated; innovation requires original thinking, not outside financing.
C) financial sectors deflect financing away from innovation and towards established industries.
D) innovation would be nearly impossible without a well-functioning financial sector.

Question

Quizplus · Accepted Answer

Joseph Schumpeter believed that a well-functioning financial sector is essential for innovation. He argued that entrepreneurs need access to capital to finance their innovative ideas and bring them to market. Without the ability to borrow money and attract investment, many innovative projects would never get off the ground. Therefore, option D is the best choice as it accurately reflects Schumpeter's views on the importance of a functional financial sector for innovation.