The reason you are getting 1 and 2 instead of 3 and 7 is because there are two different a and b variables. There's the a and b you declared outside the function, and there is the a and b which represent the values you passed into the function. (Basically, the parameters declared in the function's parentheses are newly declared variables.)
If you want to change the external a and b, change your test function to the following:
function test(x, y) {
a = x + 2;
b = y + 5;
}
Or, alternatively, don't pass a reference into the function, so that the a and b in the inner scope refer to the same a and b as the outer scope:
function test() {
a = a + 2;
b = b + 5;
}