I have always preferred that multiple choice test questions be specific and have only one correct answer. It's not as easy to do as many might imagine.
As an instructor I don't like multiple guess (or memorized) questions at all! I prefer to ask students to explain things. Much easier to identify areas requiring further study that way. I've always said (somewhat jokingly) I could train a drunken street bum with no aviation background to pass any FAA knowledge test in a couple of weeks time. (if at least somewhat sober!)
Unless it's one of those Santa Claus DPEs I read about, the same guy wouldn't last the first 5 minutes of a practical. It's the application of theoretical knowledge that really matters.