While Unit 1 provided students with an understanding of basic economic theory, Unit 2 sets them up for future analysis of macroeconomic concepts and issues. Students will learn how the economy works with a model of the circular flow of inputs and outputs and the money that pays for them. Students will also explore how economists assess the performance of the economy with an introduction to measures of economic performance and the business cycle. These concepts will be revisited in different contexts and models in the units that follow.