That's the reasonable, but minority scenario. A lot of times they want you to solve their relatively arbitrary and ridiculous problem in a very short timescale.
I give very very simple problems and hope the candidate makes small mistakes that I can watch them figure out. Sometimes they just ace them and I don't learn much but I can ask another.
A coworker asks candidates to implement the 8 queens solution using an actual computer. He doesn't care about the difference between someone who knows the answer and someone who has never considered the problem before, but expects in 90 minutes that a programmer should be able to get it working even if he has to give a few hints.
Those are what I consider somewhat reasonable questions.
However, most of my peers ask code golf questions bout C++ minutiae, or baroque algorithms questions for unusual application domains and seems to think candidates who can't rattle of answers don't know how to program. That's been the majority case at other companies I've worked at as well.