Grade Inflation or High Academic Standards?

I've been accepted to my MBA program of questionable worth, which means that all y'all will have the opportunity to hear me ruminate on the process of making the MBA sausage.

So, in the big envelope, along with my "congratulations, you're not a cabbage" letter, I received some basic student information. The interesting thing is that, right on page 1 of the information packet, they talk about their academic performance requirements. Not so odd, in an off itself, even if it is given more prominent placement that I would have expected. What's interesting is the numbers: a 2.7 (out of 4) for a course is a failing grade, while a 3.0 quarterly GPA gets you academic probation.

That all seems somewhat severe; where I went for college 3.0 was the average GPA upon graduation. So what to make of these unusual requirements? Two hypotheses:

1. Classes are easy; if you're not getting a 3.0 you're obviously not paying attention.
2. Classes are hard; the program expects mastery of the material.

I'm leaning towards the first interpretation at this point. If this were an issue of academic standards I don't think they'd set the bar so high; a 3.0, while not stellar, should still indicate basic competence. That they set their GMAT cutoff at 500 tells me that they're not expecting students to be Einsteins. Classes don't start for awhile yet, so y'all are going to have to wait breathlessly to find out what's going on.