The magnetic field lines are more around the magnet. In this magnetic field lines, the magnetic force are observed. When the paper clip comes under these magnetic field lines, it will experience more force.
By the decreasing the distance between the magnet and paper clip, more force will act on the paper clip. The magnet will attract the paper clip with the magnetic force towards itself and also adjust the direction the direction of clip depending upon the direction of north pole and south pole of the magnet.
Thus, the option D is the correct option.