I'm afraid you're a "bit lost" because Publisher is neither designed,
equipped, nor intended to be used in this way. Keep in mind that those
taking the exam would each have to be running Publisher & be familiar with
the use of the program... Otherwise they wouldn't even be able to open the
file to read the questions.
You might consider using Word or Adobe Acrobat Professional, but an
"expandable" doc is still going to be difficult to design & control. This
could conceivably be created as a form template or PDF, but it definitely
isn't a simple "point 'n' click" task. You'd probably be better off allowing
a set amount of space for the response to each question.
Also, for any future posts, please be sure to mention the version of the
software & Windows you're using. This is especially important since Vista &
Office 2007 can be quite different than prior releases, and each release can
vary a little from the other.