What should I do if I don't understand the question asked in the oral exam?

If there is a word you don't understand in the question, the best thing to do is to ask, in Japanese, for either the question to be repeated, or to admit you don't understand the question.
E.g.
質問をもう一度 言ってくれませんか？
すみません、質問を聞こえませんでした。
＿＿＿という言葉は＿＿という意味ですか。
＿＿＿という言葉の意味はなんですか。
Or, if you think you might have an idea what they mean, perhaps ask if what you're thinking is what they meant;
E.g.
＿＿＿＿＿ということですか？
However, it will be your teacher (most likely) taking the exam, and so while these phrases are certainly useful, I would check with them to be 100% that this is the kind of response they would like from you in exam conditions.