Multiple-choice Questions (MCQs) are a subset of what are referred to as "objective questions". Objective questions are questions which have a correct answer (usually only one). The term "objective" here means there is complete objectivity in marking the test. The construction, specification and writing of the individual questions (items) are influenced by the judgements of examiners as much as in any other test.
The objective test is largely used to test factual material and the understanding of concepts. Because of the objectivity and ease of marking it is frequently used for testing large groups. It is claimed that skilled items writers can develop items to test higher level intellectual skills (Cannon and Newble: 1983) but if the perception of students is that these types of questions usually test the recall of facts, then they will prepare for them accordingly.
Advantages
objective tests can sample a broad range of a course
objective tests are rapidly marked
students are not able to "bluff" or "pool" answers
scoring is objective and reliable (e.g. no halo effect)
distribution of scores is determined by the test - not by the examiner
only the objectives tested for are marked
"good" items may be stored in an item bank and reused