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There are several types of mental status exams (a group of questions and tasks) that check memory and what type and how much of memory loss the individual has that give an idea of the degree of deterioration. There are more indepth cognitive tests as well. These are commonly performed by a Psychiatrist, more specifically a Geriatric Psychiatrist, or a Psychiatric Clinical Nurse Specialist. They can not specifically tell the type of Dementia necessarily, but can give a knowledgeable professional a good idea. For example, individuals with Alzheimers often lose short term memory first, then over time this progresses to more memory loss until long term memory is affected as well. But for an individual with vascular dementia, you may find that the individual has a pattern of some long term memory problems, with less short term memory problems. This is because in vascular dementia, random areas of the brain are more likely to be affected (put in simplistic terms!)
As far as specifically diagnosing what type of dementia, for example, whether they may have Alzheimers Dementia, Korsokoff Dementia (from a vitamin B deficiency which is caused by chronic alcoholism), vascular dementia, or confusion caused by an acute illness - that is done by considering the full symptom set present, family history, Cat Scan or Brain MRI and history. There are many types of dementia besides Alzheimers that are not mentioned here.
There is new information about Alzheimers that I just read, regarding a new medication being developed. I'll send you a link to the article as it explains some of the patterns occurring on the brain in an individual with Alzheimers : http://www.cbsnews.com/stories/2008/07/29/health/main4304958.shtml
(I was unable to find the original article that I read, but this does a pretty good job of explaining the drug and how it treats Alzheimers too)
I hope this is helpful. If you have further question, don't hesitate to ask.