Does "Output 1" mean that there will be a new "Input" for Alice's account?
Output can be an old address or a change address. The latter one (change address) is recommended to use. If you create and use multiple addresses in a single wallet, Output 1 can be use as input or part of inputs for your future transactions.
You can use a whole Output 1 or part of it and then you will have another change address as Output 2 from leftover of Output 1.