I hate multiple choice tests!!
I always did very poorly on them, although, I did remarkably well on the ACT. It wasn't till college when many of my tests were in essay form that I realized I might, in fact, be somewhat intelligent!
I would suggest you look into test taking strategies. A friend taught me some strategies in college that were very helpful. It's been a long time since I've taken a test, but the one I remember that was most helpful to me:
Don't choose the right answer first! Cross off the most WRONG answer and work backward. Usually the correct answer becomes more clear or at the very least you are left with two answers to choose from. It took a lot of the overthinking/pontificating out of the equation for me and I was more likely to choose the "right" answer.
As for son worrying about teacher losing job. That's classic over at our house. In my girl's case usually they pick up on the panic/importance held by the person, in this case your son's teacher. But they usually don't know why. They "guess" to make sense of it. I really hope your teacher didn't tell them she would lose her job! That would be awful.
Sometimes the other kids hear things here or there from there parents, string miscellaneous snips together to form a "frankenstein" and pass it around the school as fact.
Aren't you glad you're not a kid anymore?
Neato