The correct answer is D. Morale.
Internal recruitment is the process of hiring employees from within the company. It has the potential to increase employee morale for several reasons. First, it shows employees that they are valued and that the company is committed to their development. Second, it can create a sense of competition and motivation among employees, as they know that they have the opportunity to move up within the company. Third, it can help to improve communication and collaboration within the company, as employees who have worked together in the past are more likely to trust and support each other.
Conflicts, misunderstandings, and income are not directly related to internal recruitment. Conflicts can arise in any workplace, regardless of how employees are hired. Misunderstandings can also occur, even between employees who know each other well. And income is not necessarily affected by internal recruitment, as employees are typically paid based on their qualifications and experience, not on how they were hired.
In conclusion, internal recruitment has the potential to increase employee morale by showing employees that they are valued, creating a sense of competition and motivation, and improving communication and collaboration.