This study explores automatic generation (AIG) using language models to create multiple choice questions (MCQs) for morphological assessment, aiming to reduce the cost and inconsistency of manual test development. The study used a two-fold approach. First, we compared a fine-tuned medium model (Gemma, 2B) with a larger untuned one (GPT-3.5, 175B). Second, we evaluated seven structured prompting strategies, including zero-shot, few-shot, chain-of-thought, role-based, sequential, and combinations. Generated items were assessed using automated metrics and expert scoring across five dimensions. We also used GPT-4.1, trained on expert-rated samples, to simulate human scoring at scale. Results show that structured prompting, especially strategies combining chain-of-thought and sequential design, significantly improved Gemma's outputs. Gemma generally produced more construct-aligned and instructionally appropriate items than GPT-3.5's zero-shot responses, with prompt design playing a key role in mid-size model performance. This study demonstrates that structured prompting and efficient fine-tuning can enhance midsized models for AIG under limited data conditions. We highlight the value of combining automated metrics, expert judgment, and large-model simulation to ensure alignment with assessment goals. The proposed workflow offers a practical and scalable way to develop and validate language assessment items for K-12.