Massachusetts Tests for Educator Licensure (MTEL):
Information, Interactive Practice Exercises, and Practice Tests
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Response and Rationale for Writing Subtest Sample Question #31

Answer: It’s important that I know whether this test will affect my grade.
 
Rationale: “Its” is the possessive form of the pronoun “it,” and “It’s” is the contraction for “It is,” so it is the second one which is correct here.Also, “effect” implies some form of result, as in the phrase “cause and effect.” Here, the correct word is “affect,” which means to influence.