This is an example of a question which requires the candidate to do a little bit of deductive work to understand what the author was really asking. The question does not actually say that the compass has been set for any particular latitude, so it is probably best to start by ignoring this possibility. In this case Option A is correct.
If however the compass had been set for some latitude other than zero, then as we move away from the Equator, we would expect the errors to decrease until we reached the latitude for which the compass had been set. The errors would then increase gradually as we moved beyond that latitude. In this case the correct option would be “Decrease then increases”. This is not an option, so we can reasonably deduce that the author of the question did not intend us to employ that interpretation.
This subject was discussed in a thread in the PPL Forum some time ago, and the discussion included how compasses are balanced for different latitudes. Some contributors argued that aircraft compasses are not balanced in this way, but an aircraft compass manufacturer provided the following statement:
I don't know if this will settle your argument, but basically you are both correct. The card assembly is balanced for the vertical component of the earth's flux lines based upon the surveyed strength by NOAA for a given latitude and hemisphere. A small weight is applied to level the display level, non-accelerated flight. The pendular design of the card assembly helps minimize (but not eliminate) the dip errors when turning and accel/decal environments. Hope this helps.
Gil Stone
President
Airpath Instrument Company
The thread becomes rather long and dreary, with much argument about what PPL students should and should not learn, but for those who wish to read it the link is:
http://www.pprune.org/private-flying...ht=blob+solder