Correct Answer: The doctor said, “Thank God! I needn’t go out in the rain.”

Solution : The correct choice is the first option.

The direct form of a sentence typically involves the direct quoting of someone's words or thoughts without any alteration.

The steps of conversion are as follows:

• The introductory phrase "The doctor exclaimed with relief that" would be changed to "The doctor said, "Thank God!"".
• The pronoun "he" changes to "I" to reflect the doctor's first-person perspective in the reported statement.
• The verb tense "didn't need" becomes needn't" to retain the original tense.
• The sentence structure changes to a direct statement within quotation marks to reflect the doctor's exact words.

Therefore, the direct form would be: " The doctor said, “Thank God! I needn’t go out in the rain.”