Final answer:
The term 'stream-of-consciousness' was first coined by psychologist William James and later adapted into a literary technique by modernist writers like Virginia Woolf and James Joyce, which reflects the characters' thought processes.
Step-by-step explanation:
The term stream-of-consciousness in literature is typically attributed to the psychologist William James, who first coined it in his book The Principles of Psychology as a way to describe the flow of thoughts in the conscious mind. However, it was later adopted by writers to represent a narrative style in literature where the written prose seeks to reflect the thought processes of the characters in an unstructured and often chaotic manner. This narrative technique emerged prominently in the modernist period, with authors such as Virginia Woolf, James Joyce, and Marcel Proust embracing and advancing the style. Their works aimed to capture the complex inner lives and mental experiences of their characters more so than external events. Virginia Woolf, for example, is recognized for her skillful use of stream-of-consciousness in novels such as Mrs. Dalloway and To the Lighthouse, while James Joyce pushed the boundaries of the style with his novel Ulysses.