The correct option is D No correction required
There are no errors in the given sentence.
‘Generation’ is singular. So, the pronoun and verb associated with it are ‘it’ and ‘believes’ respectively.
It’s, the contraction for ‘it is’, is the right word in the given context. The possessive pronoun ‘its’ means ‘belonging to it’.
Note the use of inversion (placement of verb before the subject) in 'so too does very country'. This is often seen when using the phrase ‘just as…so too’, though it is not mandatory. 'Just as every generation believes it's better than the others, every country believes so too' is also correct.