Final answer:
Lithium is the medication used to treat bipolar disorder and moderates both manic and depressive episodes at correct therapeutic dosages.
Step-by-step explanation:
The drug used to treat bipolar disorder and reduce both manic and depressive episodes at the proper maintenance dosages is c) Lithium. Lithium is known as a mood stabilizer, which helps to balance the highs (mania) and lows (depression) of bipolar disorder. Unlike other options mentioned such as Prozac (an antidepressant), Xanax (an anxiolytic), and Adderall (a stimulant), Lithium is specifically indicated for this condition. It's important to monitor the blood levels of lithium to ensure that the dosages are therapeutic and not toxic.