By having students create their own questions, and providing an answer key, I can measure their understanding of the topics much better than a traditional multiple-choice test. It's also a terrific study tool, because writing quiz questions is not easy. The most common reaction from the students? "This is haaaard" (insert whiny voice). I just smile and think, welcome to my world!
We start by writing a list of topics we covered over the quarter on the board, then come up with guidelines (how many questions, must cover at least five topics etc...) and formatting choices (multiple choice, T/F, short answer, matching etc...). You can let them work in groups or individually. After everyone has their questions and answer keys, I copy all of them and pass them out to the students for review. Their task (in groups) is to go through all the questions and mark any that they think are unclear, unfair, or should not otherwise by included on the final quiz. Again, this serves as a great study tool.
When grading the questions, it's surprising how many students answer their own questions incorrectly, and it's interesting to see which topics they avoid and which they gravitate toward. All in all, it's a valuable learning experience for both the students and the teacher.