I imagine the point of the compass question was to see if you knew the difference between deviation and variation. Deviation being a correction applied to a compass to correct the realities of a compass installation and variation, ie the difference between magnetic and true. Deviations are positive and negative NOT e/w - look at a deviation card to see they are normally given +/- on at least 4 headings (so a correction on a easterly direction would be a N/S correction if that were the case)
Assuming you knew the difference between variation and deviation that left you with distinguishing between whether deviation was a correction or an error. Since it is a correction the answer can only be c)
The great circle one is clear. It does actually say 'ON surface of the earth' so the arc one is wrong as that penetrates the surface, the other two are distractors related to rhumb line being shortest distance on one type of map projection.