Step 1: Recall accuracy definition.
Accuracy = error specified as a percentage of true value.
Step 2: Calculation.
If specified accuracy is $0.5%$ of full scale, then at $5%$ of full scale:
\[
\text{Relative error} = \frac{0.5}{5} \times 100 = 10%
\]
So the instrument error is $\pm 2.5%$ relative to the measured value.
Step 3: Conclusion.
The correct answer is (D).
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