Exactly. If 10, 20 years ago a school was accepting the top 20%, and now it's the top 5%, you'd expect performance to be greater per capita. Nominally population grows exponentially but university enrollment... maybe a much weaker exponent. The edge of the blade is the fact that if we have frozen standards we'd expect a lot of "A" grades, but the other edge is things like med school where the rules is "separate this cohort of a class into the A's B's and C's" i.e. weedout courses.

But it is an interesting and testable hypothesis. Many American unis have this exponential increase in applicants where we see the pattern. But as we all know populations in my locales seem to no longer increase exponentially but in fact decrease (presumably also exponentially). So it would be interesting to see .. if we hypothesize grade inflation is secondary to population booms, should we also observe grade deflation in population shrinkage regions such is nippon or korea? My hypothesis would be a little bit of A, a little bit of B, the inflation process, even if initially driven by population, also implicitly becomes a standard of grading that we'd expect less competitive schools to not only follow, but perhaps also cheese a bit to improve their market value.