Clark is quite right about the conflicting pressures here, but I don’t think grade inflation will be the main consequence. That’s because, for many professors, there just isn’t much room left to inflate. It’s common for profs to give everyone an A or a B now. Giving a student a C is just asking for trouble, so many profs take the path of least resistance — no grades that are apt to be contested.

Instead of grade inflation, I think that the bigger impact will be in curricular deflation — more courses at a 9th grade level for college credit.