Final answer:
Threat simulation theory suggests that dreams enable people to prepare for dangerous or anxiety-inducing events.
Step-by-step explanation:
The theory that holds that dreams enable people to prepare for dangerous or anxiety-inducing events is Threat simulation theory. Threat simulation theory suggests that during dreaming, our minds simulate threatening situations to help us prepare for such events in real life. This theory proposes that the function of dreams is to enhance our survival skills and ability to respond to potential threats.