Answer:
- Step 1, all the exponents are increased by 4 
Explanation:
The three steps are
- (x⁻² × y⁴ /y × x⁴ × x⁴ × y⁻²)⁴ = 
- x²×y⁸/y⁴×x⁸×x⁸×y² =
- x²×y⁸/y⁶×x¹⁶
Correct solution should be:
- (x⁻² × y⁴ /y × x⁴ × x⁴ × y⁻²)⁴ = all powers inside the parenthesis should be multiplied by 4 as per power of the power (xᵃ)ᵇ = xᵃᵇ
This would give next steps:
- x⁻⁸×y¹⁶/y⁴×x⁸×x⁸×y⁻⁸ =
- x⁻⁸×y¹⁶/x¹⁶×y⁻⁴ =
- y²⁰/x²⁴ 
Answer options:
Step 1, all the exponents are increased by 4 
- There should be multiplication of powers. (It is close option but is not fully correct as not all the exponents increased by 4, for example y became y⁴)
Step 2, the exponents of the same base are added during multiplication
Step 3 wasn't performed yet, there was step 1 and 2. 
- So answers about step 3 are irrelevant