(Solution) - Grade inflation is widespread college students receive higher grades on -(2025 Original AI-Free Solution)

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Grade inflation is widespread; college students receive higher grades on tests and exams today for work that would have received lower grades in the past. One recent study found that 41 percent of students had grade point averages of A-minus or higher in 2009, compared to just 7 percent in 1969. In other words, grades improve while actual learning does not. Employers often use grades and college degrees as signals in the job market where there is asymmetric information. What effect would grade inflation have on the effectiveness of college degrees and grades as signals?