Step 1: Understanding the context.
The word “remedy” refers to a solution or cure. A “panacea” is a universal solution or cure, but it can also refer to something that doesn't actually solve all problems, just like the policy in the sentence.
Step 2: Analyzing the options.
- (1) Panacea: This fits the context, as it refers to an ideal remedy that often fails to address all issues, similar to how the policy created more problems.
- (2) Dubious: Means doubtful or questionable, not relevant to the context.
- (3) Prosaic: Means dull or unimaginative, which doesn’t fit the context of solving problems.
- (4) Fallacious: Means false or misleading, but doesn't fit the context of a remedy.
Step 3: Conclusion.
The correct word is “panacea,” as it fits the idea of a remedy that solves some problems but creates others.