There are 6 stages in policy process, i.e., Problem identification, agenda setting, policy formulation, policy legitimization, policy implementation and finally policy evaluation. However, referenced to your question, a problem is first identified through discussing its activities, opinions about the problem, the participants or the causing agents of a problem and how it goes and then its agenda is set by observing where the problem is influencing the most and then raising awareness about the problem more information is acquired and thus the agenda setting for the particular problem takes place. E.g. Lets suppose, we have a problem of health issue at any place. The problem will be identified by having a look at the activities/trends of the area like hygiene, sanitation and sewage system, then a hypothesis will be formulated about the outbreak of the problem and then the proposed hypothesis will look at the situation to verify its validity that will help in agenda setting.
Hopefully, this answer is satisfying and helps in the exam.