Final answer:
The Information Processing theory suggests that we consolidate the day's memories and learning during REM sleep, playing a crucial role in learning and memory. The correct option is D.
Step-by-step explanation:
The dream theory that suggests we consolidate the day's memories and learning during REM sleep is known as the Information Processing theory. This theory posits that one of the important functions of REM sleep is to facilitate learning and memory. It is intimately connected with the cognitive processes that sort, cement, and integrate the day's experiences into our long-term memories.
Other theories of dreaming like Freud's wish fulfillment and Jung's collective unconscious focus on the psychological and symbolic aspects of dreams, while the activation-synthesis hypothesis by Alan Hobson revolves around the brain's attempt to make sense of random neural activity during REM sleep. However, amongst these, the Information Processing theory directly addresses the role of sleep in organizing and processing information acquired throughout the day.