In a single-player game, Morale always increases by 1 at the start of the Morale Phase.
Then check the position of the marker on the Morale track. The First Player must gain or discard Determination tokens as indicated on the current space. (If the marker is on the highest space, the First Player can either take 2 Determination tokens or heal 1 Wound.)
If you must discard more Determination tokens than you have, discard all of them and then suffer 1 Wound for each token you are unable to discard. (This is the rule of unfulfilled demand.) You cannot choose to suffer Wounds instead of discarding your tokens.