This two-panel diagram illustrates the starting point for analyzing a boom. The first panel shows the labor market at supply-side equilibrium (Point A), where the upward-sloping wage-setting (WS) curve intersects the horizontal price-setting (PS) curve. The second panel depicts the corresponding Phillips curve for a given inflation expectation (e.g., 3%). Point A is shown on this curve, corresponding to the inflation-stabilizing unemployment rate (e.g., 6%), where the bargaining gap is zero and actual inflation equals expected inflation. This setup establishes the stable, equilibrium conditions before a boom reduces unemployment and triggers rising inflation.