How does the trick “teaching exam” model the theme of Education Versus Propaganda/Hatred?

The topic of “book smarts” (literacy) versus “street smarts” (which may coincide with illiteracy) is central in the story. Is one more important than the other? If so, which one and why? What are the pros and cons of each?

What is the function of propaganda in the story? How do the characters’ reactions to it influence the propagandistic message? What is the author’s message?