It's not just "elite" schools that are under pressure about grade inflation - it's a problem everywhere. Giving better grades means better student reviews of the course, for which profs are rewarded (to some extent, anyway) and so it's a bit of a perverse incentive issue. Profs can get into trouble for failing too many students and can also get into trouble for going too easy on students. They can actually lose tenure if it's a big enough problem. So from a different perspective, if you're a faculty member, you can't win - the administration will get down on you for being too lenient, the students will come whining for upholding institutional standards, or worse yet, the helicopter parents will get on your case (which is a great way to prevent students from learning how to be adults and handle their own business...)

I don't grade on a curve (I'm a PhD student and teach occasionally), and I don't know any profs in my school that do. For the last course I taught, I had 7 A's and one E (and I was very disappointed to have to give that E, not for lack of giving the student opportunities to improve...) I used a straight scale for the course and rubrics for each assignment, and I had great students, which is why they earned good grades. I would see an inane example like the one above as a clear indicator that the prof was either incredibly good (and all the students are meeting learning goals, at which point there's no rational reason to curve the grades) or was utterly lousy at assessments, which is more likely.

We do have university standards on what the "average" baseline grade is for undergrads and grad students. I don't remember what it is for undergrads, but the baseline grade for grad students in our university is a B, so that's a full grade up from an "average" C. In grad schools, the base grade is usually higher than for undergrad, and you can lose financial aid if you drop down to a C average (but this varies by institution.) And unless you go for a PhD or a few other exception cases, grades don't even really matter in grad school, aside from financial aid eligibility.

Grading schemes are usually determined by individual instructors, but there are cases where there are university policies influencing those choices as well. It's a very complicated business (as I know you know, Payne1!)