Answer: D — Switzerland
Switzerland is an example of sharing of power between the national and state (cantonal) governments to account for its internal linguistic and cultural diversity.
The question asks about vertical power sharing (federal division of power) specifically to accommodate internal diversity. Switzerland is the classic textbook example cited in NCERT for a multilingual, multicultural nation using federalism to manage diversity. While the USA and Australia are also federal countries, Switzerland is the specific example highlighted in the context of managing internal diversity through power sharing between national and state governments.