How Grades Tend to Work

In a math class, most instructors assign grades something like this:
At the beginning of the semester, percentages for homework, midterms, quizzes, and final are determined.
Throughout the semester, all grades are kept as raw scores. Sometimes an instructor/professor will give ranges that serve as an indicator for how well you are doing in the course. Such ranges only serve as indicators, and do not actually shift the score in any way.
At the end of the semester, all the grades, homework, midterms, quizzes, and final are added together (using the appropriate percentages), and compared in bulk.
The instructor looks at these raw totals and assigns grades appropriately. Students who sit on the edge of two possible grades, are moved up or down depending on underlying factors such as improvement, final exam score, participation/effort in class, etc.

Example:
Say I had a class and Homework is 20%, Midterm is 30%, Final is 50%.
I take the midterm and get a 30 out of 100 points. But the average on the exam was 25, so the instructor sends out an email that says my grade falls between an A/B. It's the end of the semester and I got a 80 out of 100 on the final. I've gotten an 8/10 on all the homeworks, so I have 80% of my homework score.
Thus my raw total is .8*.2+.3*.3+.8*.5=.16+.09+.40=.65
This is low, but other students will have low raw scores too.
Perhaps I fall into the range deemed A's. Perhaps everybody got 90's on the final and 100% homework, so that I fall into the range of B's or C+'s.

I like this person's post with regards to curving and grading exams, it's titled "How to curve an exam and assign grades."