question 27: correct answer is D. Functional changes in existing synapses refers to LTP, which definitely occurs when new LTM is being formed. There is indeed also an increase in number of synaptic connections (due to more branching of the dendrites), which also occurs when only LTM is being formed. So, practice exam is wrong.
Episodic buffer question: MC answer A is wrong, it is the function of the central executive. This is not the episodic buffer's function. The episodic buffer: on instruction from the central executive, retrieves info from LTM to associate with info already in working memory, before selecting and encoding (recommitting) modified memory back into LTM. I like to think of the episodic buffer as a flap in the door of a house through which the cat comes in and goes back out as an analogy. It's best to also think of this visually, so google Baddeley and Hitch's model of working memory to see what it looks like - you'll see that all the verbal and visual info from the two storage components (phonological loop and visuospatial sketchpad) and from LTM through link of episodic buffer gets 'dumped' or transferred to the central executive.
Yeah - I've done this practice exam too and the extended response answer did include all that stuff about the hormones. There's no harm in learning it, but I didn't bother because it would result in added stress. Plus, I have enough to tackle any question on the theories of sleep.