Final answer:
Neoclassical economics views prices and wages as ultimately flexible in the long term, despite being sticky in the short term. This flexibility allows the economy to adjust back to full employment and potential GDP over time.
Step-by-step explanation:
Neoclassical Economics View on Prices and Wages:-
In neoclassical economics, prices and wages are viewed as flexible in the long term. This flexibility is key to how the macroeconomy adjusts to achieve its level of potential Gross Domestic Product (GDP) over time. While prices and wages may be "sticky" in the short term, which means they do not change quickly in response to economic fluctuations, they are not permanently fixed. Neoclassical economists argue that in the long run, wages and prices will adjust to market conditions, thereby allowing supply and demand to reach equilibrium, and enabling the economy to stabilize at full employment and potential GDP.
Therefore, the correct answer to the question is b) Flexible, to promote rapid economic adaptation, as this reflects the neoclassical perspective that, despite potential short-term stickiness, wages and prices will adjust over time to restore equilibrium.