Interesting. My friend paco is quite right that this is JAA and the right answer is what they say it is. However do note that in reality b is the correct answer to the first question, and a is wrong.
A great circle is what it says: a circle, the complete 360 degrees. It might contain two given points, and one can be drawn between any two chosen points on the Earth's surface which will contain the shortest route between those points, but it is not the shortest route between those points (unless they are antipodes, when all bets are off because there are an infinite number of equal routes). That is the shorter arc of that same great circle between those two points.
Always worth a query if you suspect they actually have the answer wrong, as you believe in this case.
As for the second question, do not forget that deviation can be expressed as + or - as well as E or W; in JAA exams it often is. In this case it is always added to compass bearing to find magnetic bearing, as adding a negative is equivalent to subtracting the same magnitude of positive number.