Final answer:
Akbar faced internal challenges including religious tensions, economic instability, and social unrest. He attempted to mitigate these through a syncretic religious policy with Din-i Ilahi, administrative reforms, and by fostering tolerance and prosperity. (option D)
Step-by-step explanation:
The internal challenges that Akbar faced during his rule included religious tensions, economic instability, and social unrest. As a Mughal emperor, Akbar was highly aware of the religious fragmentation in India and worked to create a more tolerant society by adopting and promoting a synthesized Indo-Islamic culture. He established his own religion, called Din-i Ilahi (the Divine Faith), which combined elements of various faiths, positioning himself as a central figure. Akbar's religious policies, especially the decree in 1579 asserting his authority over religious matters, caused great disturbance among Muslims in his court.
Furthermore, nationalism spurring revolts and loss of territory, as well as factional politics within the Empire, posed significant challenges for his administration. To address bureaucratic challenges, Akbar reformed the administrative structure, introducing a system of mansabdars who were responsible for recruiting cavalry and could be promoted or demoted based on performance. Despite these challenges, Akbar's policies largely promoted peace and prosperity throughout his empire.