The material outcome is what should be the goal. Tests are a relatively brute way to try and determine how well the student understands the material, but conversations about grade inflation and "back in my day getting a grade was hard", and professors purposefully putting difficult questions (not in content but in presentation of the question) all betray the inherent goal being pursued.

Its all Goodhart's law problem, but we are missing the forest for the trees talking about grades and tests when what we want is people to be educated, and critical thinkers and competent in their area and due to a comprehensive way to evaluate that we end up talking about grade inflation or how Yale vs Berkeley gives letters at the end of a semester